Vu Ba Phu, Director of the Ministry of Industry and Trade’s Department of Trade Promotion (VIETRADE), made the remark at a forum in Hanoi on December 4.
The Vietnam Brand Forum 2017, focusing on brand valuation in the context of global integration, was jointly organised by VIETRADE and UK’s Brand Finance.
No Vietnamese name figures in the list of top 500 world brands, showing that enterprises here are yet to fully realise the importance and value of branding in a globalising market, he said at the event.
The brand equity of some firms carries greater value than their physical assets, he added.
Phu also said that a firm’s evaluation, done according to global financial standards, was significant in helping reduce losses to the State in the process of equitisation and avoiding any disadvantage these enterprises may encounter in the process of franchising, or mergers and acquisitions.
A highlight of the forum was the announcement of top 50 Vietnamese brands by Brand Finance Asia Pacific.
Military run telecom firm Viettel dethroned last year’s top pick, dairy firm Vinamilk, pushing it to second place.
This year, the Viettel brand was valued at US$2.5 million, followed by Vinamilk at US$1.362 million and Vietnam Posts and Telecommunications Group (VNPT) at US$726 million. Real estate giant Vinhomes ranked fourth with US$604 million and Saigon Alcohol Beer and Beverages Corporation (Sabeco) ranked fifth with US$598 million.
Brand Finance noted that the total of Vietnam’s active brand names in 2017 topped US$11.28 billion, 32% higher than in 2016.
Major Vietnamese brands are in telecommunications, food, banking, beverages, real estate, retail, aviation, petroleum, automobile, construction and civil engineering, insurance, entertainment and travel.
Samir Dixit, Managing Director of Brand Finance Asia Pacific, said brand management was extremely important in promoting a company’s stock value during mergers and acquisitions, and increasing its regional and global competitiveness.
Dixit also warned that out the 500 largest brands in the world, no name came from Vietnam. That alone should be a clear indication of where Vietnamese brands stand, he said.
He added that Vietnamese businesses need to know exactly how much their brand is worth according to international standards so that they can manage it better.
He hoped that the country’s brand management will focus more heavily on measuring its economic value and social impacts.
Lai Tien Manh, Managing Director of the Mibrand Company, said that the concept of brand evaluation was relatively new here, so local enterprises do not have much experience dealing with it, despite its crucial importance in developed countries.
Investors are getting more and more interested in a business’s brand value, willing to spend large amounts on such intangible assets, Manh said. However, he added, it is often treated as less important than sales and profits.
The trend of mergers and acquisitions that is sweeping over Vietnam will place great importance on brand value, which will either increase or decrease a firm’s worth during transactions, he said.
Dang Xuan Minh, General Director of AVM Vietnam and head of the Vietnam M&A Forum’s research group, cited the equitisation of the State-owned enterprise, Trang Tien Ice Cream JSC.
At the time of equitisation in early 2000s, the enterprise was valued at just VND3 billion (US$133,511). But in 2015, after its latest ownership transfer, the company’s value has risen to VND500 billion (US$22.2 million), with a brand value of VND150 billion (US$6.67 million).
Minh said that in the context of accelerating equitisation, it was necessary to have a legal foundation for brand valuation that ensures that it is transparency and in line with international standards.
Other speakers at the forum spotlighted the needs and challenges of building and promoting brands, as well as conducting brand valuations in Vietnam.
They said local enterprises need to revaluate and orient their business strategies to channel more resources into brand development.
This is the third year that Brand Finance has carried out brand evaluation activities in Vietnam.