How One Family-Owned Company Took On the Multinationals and Won

If Coca-Cola offered you $2.5 billion, would you turn it down? My family did.

$2.5 billion.

That is the amount of money we walked away from in 2012. This was the figure The Coca-Cola Company had offered to acquire a controlling interest in Tân Hiệp Phát Beverage Group (THP), the family-owned business my parents founded in 1994.

As I sat in that glass-encased conference room at Coca-Cola’s headquarters, my head was spinning. I glanced nervously at my father, my heart beating furiously. With only that glance, I knew why he had been so successful. His drive, determination, and self-belief were etched all over his sixty years. His poker face fixed, his eyes focused, and his face hewn from his boxing days. He gave nothing away.

Coca-Cola had dispatched a private jet for us, flying us from New York to Atlanta for a private audience with the then-CEO, Muhtar Kent. Everyone knew why we were there: Coca-Cola was interested in acquiring THP. These negotiations would decide the terms.

Coca-Cola wanted us to share their dream. Their presentations were designed to impress us, overawe us even. Most people would have been bowled over. Sitting across the negotiating table from us were executives from one of the world’s biggest multinational corporations (MNC).

According to Forbes’s rankings, Coca-Cola also owns the fifth most recognizable brand after Apple, Google, Microsoft, and Facebook.

It is a giant in every sense of the word. In 2012, it generated revenues of $48 billion, and there was no corner of the planet where it was not aggressively marketing its products, including Vietnam. In fact, Kent had visited the country earlier in the year and pledged to invest an additional $300 million over the next three.

Both sides were aware of Vietnam’s potential as its citizens’ incomes and spending power rose. Never was this clearer than when we visited Mexico at Coca-Cola’s invitation. The country ranks as Coke’s number one global market, accounting for about 11 percent of sales back in 2012. At that time, the average Mexican consumer was buying almost 160 liters of soft drinks per annum, compared to just below 30 liters in Vietnam.

Yet as we negotiated back and forth in Atlanta, it was obvious there was a Vietnamese-sized elephant in the room. Coca-Cola showed us their plans to grab ever more market share across the emerging markets. But if we agreed to their terms, THP would only be allowed to expand its own market share in Vietnam, Laos, and Cambodia.

We would have to hand over our export business to Thailand, Australia, and other parts of Asia. The terms specifically restricted THP from venturing into markets outside those three countries.

The agreement also required THP to give up new product development. This constraint would have undercut one of our core strengths: THP’s record of product innovation achieved from a hard-won understanding of the Vietnamese market and its consumers. It had generated our bestselling products, including Dr. Thanh Herbal Tea, Zero Degree Green Tea, Number 1 Energy Drink, Number 1 Soya Milk, Number 1 Active, and Number 1 Juicie Fruit.

The provisions were nothing less than a deal breaker for us. THP’s vision was, and still is, to expand throughout Asia and beyond with new and exciting brands. We rejected Coca-Cola’s offer, walking away from the $2.5 billion payday and the history books. If the deal had gone ahead, it would have been the largest-ever foreign acquisition in Vietnam’s history by deal value. It still would be the second largest today.

It was not what the Coca-Cola executives had been expecting at all. As the elevator doors closed on their surprised faces, my father moved his hand to mine, gently smiled, and whispered like the gambler he has always been.

“Never show emotion; never show your hand,” he said. “Proud we stand, as we always have and as we always will. A partnership should be exactly that, a meeting of minds tied together by a shared passion. What we just experienced was not a meeting of minds.”

I have never felt so proud or strong-willed as the elevator whisked us down to the lobby. For it is never easy to compete with giants, let alone face them down.

Squaring off against a much bigger competitor requires nerves of steel, particularly one that hails from the richest and most powerful country on the planet. But my father taught me a valuable lesson that day: understand our values and what our company stands for, what direction we are heading in, and above all else, do not be dazzled by the power that multinational companies are able to display.

After returning from Atlanta we explored other arrangements with Coca-Cola, but nothing came of it. Our visions were just too different. So, we walked away from the $2.5 billion and said thanks, but no thanks.

Perhaps one day THP and Coca-Cola could be partners, but at that point in time, we remained competitors. In the ensuing years, THP has attracted attention from other global brands, including PepsiCo, plus the Japanese companies Ito En and Asahi.

My father taught me a valuable lesson that day: understand our values and what our company stands for, what direction we are heading in, and above all else, do not be dazzled by the power that multinational companies are able to display.

We are David to their Goliath in terms of revenues and operating history. However, that does not mean we had a weak negotiating hand when we were dealing with Coca-Cola — far from it. We had been successfully competing against them for almost twenty years. We were outselling both Coke and Pepsi in non-carbonated alternatives such as teas and energy drinks.

One of the reasons for this success was THP’s product line of healthier alternatives compared to the vast melee of sugary soft drinks, which had made Coca-Cola one of the world’s most successful companies. Ours was a market segment that Coca-Cola was keen to move into, so we had been on the alert for any predatory approaches.

But how had one local Vietnamese company carved out that market share for itself in the first place and from nothing? Play word association with most foreigners and the words that still most usually spring to their minds about Vietnam relate to the war, to the boat people, or perhaps to a nice holiday in the sun. They generally do not involve a dynamic, fast-moving consumer-goods company with global ambitions.

We hope our story rectifies that, to explain how it is possible to build a thriving local company and turn it into a national champion. At its heart, our story about how two very determined individuals emerged from the ashes of the Vietnam War and fought their way through numerous hardships to create a company that produces some of Vietnam’s best-loved drinks brands.

How they learned to adopt the best international standards while navigating the challenges of domestic upheaval and US sanctions. How they resisted the moneyed courting of multinationals like Coca-Cola and became stronger as a result. How they successfully rode the wave of Vietnam’s growth, as the country arises from devastation and chaos to take its place alongside Asia’s most vibrant economies.

Today THP is still independent, but that does not mean the company is not open to partnerships with multinationals or other companies. We are — as long as they are win-win partnerships. Our story aims to show that local companies can easily stand their ground against the multinationals and prosper. Local companies have many advantages, some of which they may not even be fully aware of.

We may be witnessing the birth of a new type of multinational: the Asian multinational.

Globalization, which propels the multinationals, can seem like a powerful, almost irresistible force. This is particularly the case across the emerging and frontier markets where many independent companies like THP may have only recently become national leaders, wondering how they can fend off these global giants who have suddenly become interested in their country.

We hope THP’s example will inspire other companies that hope to follow suit but may lack the confidence to face the giants head-on.It is always good to remember that today’s global giants were once small companies trying to find their own way, too.


Adapted from Competing with Giants: How One Family-Owned Company Took On the Multinationals and Won. Copyright © 2018 by Phương Uyên Trần. Published by ForbesBooks.

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