The profit challenge of green brand development

Traphaco has established safe growing areas to serve green production

The troubling issue was discussed at an April seminar in Hanoi sponsored by the Ministry of Industry and Trade’s Vietnam Trade Promotion Agency (VIETRADE), in coordination with the Institute for Brand and Competitiveness Strategy (BCSI), on “Branding strategy in association with green growth”. Seminar participants discussed solutions to develop Vietnamese brands on a sustainable basis.

Up to 80 percent of consumers now agree to pay a higher price for products made by firms displaying social corporate responsibility and a tendency towards sustainable development, according to Nielsen Vietnam.

Nielsen Vietnam also reported that products with branded commitments to good quality and eco-friendly development are much more likely to succeed than those without – with the former having four percent growth prospects as opposed to one percent.

Dao Thuy Ha from the Traphaco Joint Stock Company said Traphaco’s success is attributed to green growth. Company products are made of natural materials. Traphaco has formed its own areas for growing safe herbs to serve pharmaceutical production. “Under our plan to 2020, with a vision to 2030, we will strive to pioneer in green pharmaceutical development to protect people and the environment,” Ha said.

Conflicting targets

But although green growth helps increase competitiveness, green brand development in Vietnam faces many difficulties. Vu Xuan Truong from the BCSI said the conflict between two objectives - profit and green growth - is the biggest difficulty faced by enterprises. Businesses, especially small to medium-sized enterprises, are financially weak and therefore find it difficult to procure equipment and technology for green production.

Green production remains unpopular in Vietnam. In some cases, businesses have been provided with advanced technology but are unable to make full use of that technology due to manpower inadequacy.

Meanwhile, many consumers still think green products are only for high income earners. A survey by the National University of Economics shows that while consumers in major cities are willing to pay high prices for green products, most rural consumers have no idea about the benefit of such goods or are not interested in green products.

Economist Luu Bich Ho said at the seminar that the state plays an important role in encouraging businesses to reach green growth, and that community and enterprise awareness of green production and products should be improved.

A VIETRADE representative said at the seminar that VIETRADE will soon work with the Ministry of Natural Resources and Environment to set overall targets and plans to integrate the National Branding Program with Vietnam’s Eco-labeling Program in order to assist enterprises to develop green production and branding.