From Hardships to Success in Vietnam

The beginning was not easy for furniture manufacturers Niemen Tehtaat in Vietnam. However, support from Finnpartnership helped them to get over the worst difficulties.

Established in 1898, Niemen Tehtaat Oy is the oldest furniture manufacturer in Finland. The family business has been exporting its products for some time already, but at the beginning of the 21st century a completely new pace was set for internationalisation. ”Back then buyers for furniture retailers only talked about China and domestic production was not really appreciated. That scared even me and I had to start investigating what going to Asia would mean”, Managing Director for Niemen Tehtaat Oy, Panu Niemi, recounts.

Niemi visited China on several occasions. The large country did not seem to be a natural place for a small-to-medium sized business, so the Finnish entrepreneur finally ended up in Vietnam. The company had previously bought small shipments of furniture and so establishment was initially sought with already identified business partners. ”In 2004 we founded a partnership company that manufactured wooden garden furniture. Cooperation was very difficult right from the start, though, as we had very different visions, for example, concerning product pricing and further development of the business.

Support from Finnpartnership helped through the most difficult times

Cooperating partners agreed to go their separate ways. However, dissolving the business cooperation required long and complicated negotiations. In a difficult situation, as they moved onwards from a partnership to establishing their own subsidiary, Niemen Tehtaat received background support from Finnpartnership in the form of Business Partnership Support. ”It gave us an opportunity to use the needed expert help in the contract negotiations. Expert lawyers, accountants and other experts do not come cheap in Vietnam either. Without the help from Finnpartnership, I would have probably saved in the wrong place.”

The company received business operation and decision making power in 2007. Since establishing Niemen Tehtaat Vietnam Ltd, development has been positive. ”Our intention is to expand and further develop our operations in Vietnam and commit ourselves to the country so that it becomes an all the more significant part of our operations. It is an illusion to think that Vietnam is a country where everything you touch turns into gold. The same laws of industry and commerce apply there as in Finland. Only hard work and long-term operations yield results. In many ways, we still consider ourselves to be at the beginning of our journey, but we have a firm belief in the future. We definitely are in Vietnam to stay.”

Local rules of play need to be thoroughly known

While dissolving cooperation and establishing their own company, Niemi noticed, that the legislation and business culture in Vietnam need to be known thoroughly in order to succeed. ”You need to familiarise yourself with it completely. It is worth looking for help from true experts, who you can find, for example, in international accounting communities. You also need a professional and reliable staff, who can be creative in the complex bureaucracy.”

The Vietnamese subsidiary has around 20 employees in their administration and goods inspection, all of whom are local. Indirectly the company employs well over a hundred people. The offices and showroom are in downtown Ho Chi Minh City, that is, Saigon. The logistics centre is located an hour’s drive from downtown. ”Our operations are based on a network of subcontractors. In Vietnam, we have over 50 suppliers ranging from small workshops to larger factories.” Niemen Tehtaat is planning on manufacturing the products by themselves. At the moment, plastic polyrattan summer furniture and local carpets and crafts are bought from Vietnam. Finding trustworthy manufacturers which produce high-quality goods is not easy. Niemi emphasizes a long-term collaboration once a suitable business partner has been found. ”It is extremely important that our partners also trust us. We pay what we have promised – sometimes in advance, if we know that the manufacturer is in trouble. We also have a good reputation in Vietnam.”

Responsible business to Vietnam

Long-term business partnerships also help to develop quality and ensure that the partner is acting responsibly. ”We operatate on such a small scale that it is easy to keep it under control. We meet with our partners regularly and come on location to see their operation. I believe that this way we can contribute to responsible business and respecting the employees.” The products produced in Vietnam complement the entire product range for Niemen Tehtaat. The production facilities located in Sastamala and Suodenniemi in Finland manufacture mainly wooden furniture. The most important customers are Finnish furniture retail chains. ”Initially the staff probably assumed that production from Finland would be moved to Vietnam. This did not happen, actually quite the contrary. Vietnam makes us a more interesting partner, so operating there also furthers our Finnish operations.”

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