Minh Long I Porcelain Co. Ltd.

• Main Authors: ZERRILLO, Philip C., CATASTI, Paolo, OHLSSON-CORBOZ, Anne-Valerie
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Distribution Networks; Channel Strategies; Developing Markets; Vietnam; Porcelain; Asian Studies; Marketing; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/cases_coll_all/20; https://cmp.smu.edu.sg/case/2551
• Institution: Singapore Management University

The case looks at the porcelain industry in Vietnam, and more specifically at the family business Minh Long I. The case is set in early 2009, at a time when Vietnam is rocked by the global recession. It opens with the discovery by Ly Ngoc Minh, CEO of Minh Long I that Metro, a chain of seven department stores across Vietnam, has no intention of bringing the price of its porcelain pieces back to the level that was agreed on in their sales and distribution agreement. The backdrop for this decision comes in the midst of a turbulent economy characterized by high inflation and 20% plus interest rates. The 2008 global recession had led Vietnamese banks to tighten their lending policies which in turn led Metro and several other retailers into lowering their prices below the agreed upon retail price in order to quickly move stock, boost cash flow and reduce risk. Minh Long I management, seeking to preserve their position as a premium brand in the market, is left to decide whether to terminate the agreement with Metro, and potentially other distributors, or allow distributors to set their own prices. Losing the commitment of large distributors in hard times was risky, but the company had spent years building partnerships that added value to its products. While experts could appraise the high quality of Minh Long’s porcelain, the naïve consumer did not always recognize the quality. While the performance of the product was easy to recognize in use, it was not obvious before purchase, often leading uneducated consumers to use price to make their decision. Minh must decide whether to change the company’s distribution strategy in the face of the new economic reality or to continue with a high price high touch emphasis.