09/12/2022

President of Nam Long Group’s dream of a legendary company

Looking back at the journey from a construction company of 7 employees to a leading real estate developer in Vietnam with more than 800 employees, Founder and Chairman of Nam Long Group (NLG)  unassumingly believes that this time has only built a solid foundation.

"Compared to human life, Nam Long is a 30 years old person, mature enough to integrate and develop.” Quang said.

Reflecting from reading the book "From Good to Great" by Jim Collins, Quang finds that Nam Long is “good” but not yet “great”. He dreams of bringing Nam Long to the greatness level, just like how he laid the foundation of the company 30 years ago.  

The early 90’s. 

Nam Long Construction Limited was established on a day in November, 1992, after the Government opened the door for private companies. At the time, state-owned companies had more advantages so at the beginning, Nam Long was just a "subcontractor of subcontractors", which is not yet named in the contracts.

7 people worked in a room of only 28m2, on the ground floor of a rental house on Dinh Tien Hoang Street, District 1, Ho Chi Minh City. The company name “Nam Long” means a southern dragon, the dream of a young architect at the time. 

Graduating from Ho Chi Minh City University of Architecture, having spent a decade working at a design institute and a contractor, Quang found the environment at state-owned companies difficult to nurture his passion. He embraces the "dream" of creating a "professional playground" where engineers and architects can gather, build culture and work in their own style. The 30-year-old architect did not have any thought of the distant future or how Nam Long would grow in the future, but only one thought: How can the company survive?

Signing as a subcontractor for state-owned enterprises is also the historic path of major construction companies in Ho Chi Minh City, such as Hoa Binh Group, An Phuoc, etc. The founders of Nam Long often made jokes like “self-made company”, a “self-styled director”, because good candidates would find a way to politely refuse to work at Nam Long as they did not believe the company would grow. 

In these early days, Nam Long’s foundation was the strong construction and design team. It was still very difficult to survive in the market. High inflation, rapid increase in prices of iron and steel materials leading to higher risks in terms of costs, labor safety, etc. prompted Quang to decide on doing something more active.

The opportunity came in 1995 when the government allowed private real estate companies. Nam Long was one of the first five companies, along with others including Minh Phung, Huy Hoang...

"Stepping into the real estate industry was a chance. I’ve invested in rental properties since the 90s, which gave me lots of experience despite the business being personal. Nam Long’s turning point was becoming the main contractor, then real estate developer, from a subcontractor”, said Quang. 

Nam Long’s founders did not only dream of building the house and selling it, but to create the townships, living complexes that have quality and aesthetics. Houses are just parts of the compound of parks, green spaces, sports facilities, schools, supermarkets and other services. In particular, Nam Long’s townships must bring real value, that is selling to people who really need a home full of warmth and happiness every night. 

This vision has made Nam Long different from other real estate companies. As others focus on selling land, Nam Long meticulously created planning, built roads, wells for the residents, etc. While luxury properties are "delicious pieces of cake" for others, Nam Long chose to sell affordable housing. And this challenging journey has yielded sweet fruit, 11 townships, providing homes for more than 30,000 families.

Now when mentioning Nam Long, the outstanding identity is the diverse product portfolio from "affordable" apartments, to townhouses, villas and mansions in the townships. Last November, Nam Long surpassed the billion-dollar value mark on the stock exchange, a very important milestone after three decades of establishment. The next generation of the group is aiming for a vision of 2030, to become the leading and innovative integrated real estate company in Vietnam and the region.

The invariant value of three decades

Considered experienced in the real estate market, but not less than one time the market has questioned if Nam Long is moving behind other companies. Little that they know this is a strategy of the company's founders to spend sufficient on creating a sustainable foundation. 

Quang believes that borrowing money to do big and become recognizable is easy but if there is an imbalance in finance and products, the business will not be able to grow.

What the founders have always been proud of over the past 30 years is creating a globalized and growing business. Globalization is not simply about culture, business models and policies, but also the structure and system. It is a transformation in both thinking and working style, something that requires a lot of time and is not easy.

For example, to become a joint stock company that is able to play the global game, Nam Long has been preparing since 2005. At the time, persuading founding shareholders to change from family business to a joint stock company was not easy. The mindset of most Vietnamese people at that time favored private assets, not joint stock or public companies. It took 2 years for Quang to convince the Board to convert to a joint stock company model. It was a big turning point, opening the door for foreign partners, ready for the journey of globalization.

The group had welcomed big partners over the years, Goldman Sachs in 2018, one of the 5 big banks in the US, Mekong Capital in 2010, IFC (Worldbank) in 2014, Keppel Land in 2015 and two investors with more than 100 years of experience from Japan, Hankyu Hanshin Properties and Nishi Nippon Railroad in the last 8 years.

Quang explained, globalization is not only about making products together, but also sharing culture, business model, working methods, principles, core values and more importantly, respecting operating standards.

"Many people asked me how to increase profitability. But in every project, regardless of the scale, Nam Long is always ready to split the profit with foreign partners. For me, sharing is not a loss, but rather a gain. The project has more stable capital, safer for customers, higher operating standards, maintaining brand value and reputation. That is a huge gain!", said Quang.

But Nam Long’s management team also understands that the company must comply with strict international standards to “stand on the shoulders of giants”, that is integrity. This is also one of Nam Long's three core values during 3 decades of development.

On the board at Nam Long’s first office sat the words "trust, quality”, which was rare in the market at the time. No one had much experience with marketing-branding, so these words were meant to remind each other to look in the same direction. Until now, they are still Nam Long’s core values and remained unchanged throughout its development. 

"If you don't have commitment, you can't work with international partners, individuals and corporations. This is the culture, the code of conduct. And when you have obtained a certain standard, it will be a passport, making it easier to  work with other partners. That's how Nam Long does it ," said Quang.

For him, a business without commitment has no foundation. Commitment to him is very simple to understand, that is committing to what must be done and doing the best possible.

Whether it’s 30 years ago or 30 years later, regardless of different products and market segments, trust remains Nam Long's invariant value, connecting the past and the future.

The “dragon” transformation

Pioneering in developing affordable housing and reaping great success, Quang and NamLong had faith in this choice. During his trips to Malaysia, Singapore, Indonesia, the Philippines, etc. he always thought about products that would suit the economic situation, culture and financial capability of the people in Vietnam, an agricultural country where urbanization had just started. And affordable housing has always had a huge demand in developing countries like Vietnam.

Not only helping the company maintain a consistent customer portfolio throughout 30 years, the affordable housing is a convincing strategy for foreign partners to invest in Nam Long.

Reality has proved that Nam Long is on the right path as products including EHome, Flora, Valora always perform well in the fluctuating market. So despite the product portfolio being more diversified to respond to the market's demand, every product is priced reasonably based on this principle: Whatever product the Vietnamese need, Nam Long will make that product.

Nam Long’s product strategy is similar to Toyota’s, with affordable products such as Innova and luxury products like Lexus. Product development is based on research of market, customer, absorptive capacity, financial potential of the business, and investment efficiency...

Sharing about the vision after the 30-year milestone, Quang said that the real estate sector relies on many factors, not only in terms of capital structure or funding, but most importantly, having a proper strategy and managing risks.

This prompted Nam Long to choose McKinsey in 2019, a leading consulting firm in the world to develop vision for the next 10 years: to become the leading integrated and innovative real estate company in Vietnam and the region.

To achieve this goal, Nam Long also changed the organizational structure as well as the business ecosystem. Instead of maintaining functional units we have changed to three main business units.

Of which, unit 1 is responsible for land acquisition. Unit 2 is responsible for the development of integrated housing and urban projects, in parallel with project development companies under partnership with our partners from Japan. Unit 3 focuses on commercial real estate development in integrated townships. It is expected to generate 15% of total revenue with stable income. 

"In the short term, Nam Long has a 3-year plan for integrated townships. As for the education and retail sectors, we are proceeding in parallel. They will provide added value to our townships, as well as create new businesses to supplement the core business, bring in revenue and profit for investors and corporation", Quang shared about the future vision.

Dragon transformation is like that, Nam Long has to accept the new game and choose the right person to take part in this game. 

After 30 years of leadership, Nam Long’s founders began the transferring process to the next generation, to continue the legacy. Quang said he was interested in "picking the right person and inviting him on the same bus" in the book From Good to Great. Nam Long's criteria for selecting people is based on their suitability with Nam Long’s culture. According to Quang, a good candidate is not enough, but must be excellent and a match for the culture. For a real estate developer, without creativity and the ability to create a good product for the market, it’s a failure.

When asked if Nam Long is rooting for family management, the founder said that the company has been a playground for appropriate, competent and responsible players after becoming a public company.

"As for empowering children, I have to consider whether my children like it or not and have the ability," Quang said.

In recent conversations, he also repeatedly emphasized that the company is in a "dragon transformation", to go from good to great. In the next 10 years, not knowing if Nam Long would become great, the president believes that greatness is not a moment, but a process.

"Good is not enough. And there is a big gap from good to great. I think if you are not great, then there is no point in permanence. However, greatness is sometimes not a big thing. If you can build the right culture and people, it is already great, without knowing the last result. A company can also be great with just 10 people” said Quang.

Source: VnExpress