Staff report

In 1929, a group of Chinese in China Town set up Trung Hue Company, which specialized in semi-industrial cigarette production. The factory was built on a vacant lot located between Saigon and China Town. Its workers were mostly Chinese and its products were popular with low-end consumers.

Despite the owners’ acumen, Trung Hue Company nonetheless failed and went bankrupt due to a shortage of capital, technology and organizational skill. As a consequence, the factory was sold to French investors.

On July 8, 1929, the now French-owned factory started operation under name of M.I.C. by 1932, thanks to its cooperative arrangement with a multi-national company, M.I.C became highly developed thanks to professional investment in finance, technology and marketing.

In April 1975, Mai Lan (ex-vice director of Thang Long Cigarette Company) was appointed by the Food and Foodstuff Ministry to act as director, together with Nguyen Van Do, Tong Van Sanh and Tong Phuoc Hap, to run the factory under it its former name of M.I.C.

On December 28, 1977, the M.I.C Cigarette Factory officially changed its name to Saigon Cigarette Factory (SFC) under control of the Southern Tobacco Union Factory (STUF).

Brands manufactured by SFC included Saigon Giai Phóng (Liberation Saigon), Nong Nghiep (Agriculture), Vam C and Cuu Long, and these achieved notable success despite poor conditions the factory was constrained to cope with, such as materials shortages, incomplete production lines and insufficient spare parts inventories.

Faced with many issues that were hindering production, the factory’s management met with city leaders to search for solutions. Concerned and open-minded, the city leaders listened, debated and finally acted firmly, supporting the factory wholeheartedly. Consequently, STUF saw its production start to boom

31 million cigs in 1980

1980 was milestone for Southern Tobacco Industry because tobacco production was almost completely changed to resolve issues hindering production development.

The successful implementation of the 1980 plan was pivotal. Development transformed the business from a subsidized entity to a market-driven company with the ability to troubleshoot its problems to learn from its experiences and to dare to change its mind. The company was not only the first entity in Ho Chi Minh City to pay salary based on product quantity but was also the only one proposing and adopting many new ideas to access markets.

The company saw out the 1980s having achieved notable success upgrading its lines, developing production, ending the subsidy mechanism and looking forward to encouraging future prospects.

The 1990s was a decade of renovation, progress and integration. It presented many advantages as well as difficulties and challenges to overcome. The factory therefore continued planning and implementing development strategies, adopting a broader vision that included intensive investment, product diversification, local market expansion, increasing exports and brand building in preparation for integration into the regional economy, allowing stable integration into a wider market economy.

Within first six years of the 1990s, the factory invested in 13 rolling machines, nine cigarette makers, two packaging lines of 10 and 20 cigarettes per pack, seven soft packaging machines, 18 overwrappers and 13 boxers, increasing capacity from 320 million packs in early 1990 to 872 million packs in 1996.

On January 2, 2004, Saigon Cigarette Factory assimilated V?nh Hoi Cigarette Factory, merging into Saigon Cigarette Factory under a decision issued by Vietnam National Tobacco Corporation.

This required a company with more than 2,000 staff to merge with a factory employing 1,300 workers, and necessitated moving the people and hundreds of thousands of tons of equipment to V?nh Loc Industrial Zone in accordance with the policy of the City and Vietnam Tobacco Corporation. The company rose to the challenge, and the new factory rose on a 140,000 m2 lot located at V?nh Loc Industrial zone, Bình Tân District, Ho Chí Minh City. Saigon Tobacco Company also invested heavily in a fiber processing section to improve cigarette in an ongoing project to 2010 as a necessary enhancement required by Vietnam’s tobacco industry, specifically replacing fiber processing technology, minimizing poisonous substances in aromatic spices and auxiliary flavoring to meet increasingly high consumer requirement and international common trends. In which circumstances, a complete modern fiber processing line with capacity of six tons per hour manufactured by Hauni has been purchased to minimize environment pollution and to improve quality of finished tobacco fibers whereby to produce cigarettes with minimum nicotine, tar content which is less poisonous to consumers, and is highly competed. Capacity of the new factory is forecasted to reach 2 billion packs per year.

On December 6, 2005, under Decision No. 319/2005/QD-TTg signed by the prime minister, Saigon Cigarette Factory, under the control of Vietnam National Tobacco Corporation, was transformed into Saigon Tobacco one-member limited company. The company was restructured and organized for more efficiency.

Saigon Tobacco Company presently has six production departments and 15 departments together with some affiliates with total of nearly 3,500 staff

In 2008, the company produced and sold more than 1,500 million packs (among which more than 540 million packs were for export), paid more than VND2,000 billion (US$108.26 million) to the state budget.

Along with maintaining and expanding its market, the company has also invested intensively in technological renovation, installing more modern equipment such as Hauni Protos 90E/HCF-SL with a 10,000 CPM output and German-made Focker 350S AM and Italian14-X2NV-C600 hard packaging lines with a 400-pack per minute capacity.

The company has cooperated with British American Tobacco Company (BAT) to produce 555, Pall Mall and Dunhill and with Philip Morris to produce Marlboro. In 2009, export volume of packed cigarettes is predicted to increase nearly 20% in comparison with that of 2008, the products are exported to Middle East, Africa, Asia…at reasonable price and good quality. Overall, the global market share of these products has been increasing.