Case study masan and ethical issues

MINISTRY OF EDUCATION AND TRAININGNATIONAL ECONOMICS UNIVERSITY--- ---BUSINESS ETHICS GROUP ASSIGNMENT Lecturer: Nguyen Bich Ngoc CASE STUDY: Masan and Ethical Issues... MINISTRY OF

MINISTRY OF EDUCATION AND TRAININGNATIONAL ECONOMICS UNIVERSITY

-

-BUSINESS ETHICS

GROUP ASSIGNMENT

Lecturer: Nguyen Bich Ngoc

CASE STUDY: Masan and Ethical Issues

MINISTRY OF EDUCATION AND TRAININGNATIONAL ECONOMICS UNIVERSITY

-

-BUSINESS ETHICS

GROUP ASSIGNMENT

Lecturer: Nguyen Bich Ngoc

CASE STUDY: Masan and Ethical Issues

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AbstractMasan is a dynamic and highly diversified company that operates acrossvarious industries, including consumer goods, retail, and financial services.With its headquarters in Vietnam, Masan has established itself as a leadingplayer in the market, known for its innovative approaches and ethical businesspractices.

Founded with a vision to create sustainable value for all stakeholders,Masan has continuously evolved and expanded its operations since its inception.Masan's success can be attributed to its unwavering focus on delivering high-quality products and services that meet the evolving needs and preferences ofconsumers The company's portfolio comprises well-known brands that havebecome household names, such as Chinsu, Omachi, Wincommerce, andTechcombank commanding a significant market presence

In addition to its pursuit of commercial success, Masan places a strongemphasis on corporate social responsibility The company recognizes theimportance of sustainable practices and actively engages in initiatives thatcontribute to the well-being of communities and the environment Throughphilanthropic endeavors and partnerships, Masan strives to make a positiveimpact on society beyond its business operations

However, along the way, Masan has committed several ethical

misconducts about marketing and food safety These occurrences have led toskepticism and disapproval from the public, eroding customers’ trust in Masan

To tackle the scandals, Masan has been actively seeking solutions to minimizethe negative effects on its business and has achieved encouraging and favorableoutcomes

In this report, we delve into Masan's business ethics practices, explore thechallenges faced by Masan due to its involvement in controversial misconduct,and examine the strategies implemented by the company to recover from theresulting damage to its reputation and scandals to regain trust and restore itsstanding in the eyes of consumers and the public

Table of Contents

Abstract 1

A Introduction 3

1 Masan Group 3

2 Masan’s business 4

B Analysis company’s business ethical issues 7

1 Ethics in Human Resource Management 7

1.1 Ethics in recruitment, appointment, employment 7

1.2 Ethics in Employee Assessment 7

1.3 Ethics in protecting workers 7

2 Ethics in Finance & Accounting 8

3 Toxic competition 8

3.1 The "instant noodle war" between Masan and Acecook Vietnam (2011) .8

3.2 Masan and the fish sauce scandal (2016) 9

4 Food Safety 9

4.1 The story unfolded 10

4.2 Conclusion 10

5 Marketing 11

5.1 Nam Ngu fish sauce “For consumer health” ,purely extracted from 100% fresh tuna Is Chinsu fish sauce really premium-grade salmon fish sauce? 11

5.2 Tien Vua noodles: The packaging states “ No Transfat”, but further testing reveals otherwise 12

5.3 Other scandals 13

5.3.1 Tam Thai Tu soy sauce does NOT contain 3-MCPD 13

5.3.2 Chinsu seasoning powder “without MSG” 14

5.3.3 Omachi potato noodles: Contains only 5% potatoes 14

C Conclusion 16

References 17

A Introduction

1 Masan Group

Masan Group is a leading conglomerate based in Vietnam that operates in diverseindustries such as food and beverage, infrastructure development, and mining, amongothers The company was founded in 1996 and has grown to become one of Vietnam'sbiggest and most successful business groups Masan Group has a strong focus onsustainable development and innovative solutions, making a positive impact on thecommunities they serve The company has a presence in Vietnam and is constantlyexpanding its operations both locally and internationally

In Vietnam, Masan Group is often known through famous products and brands such

as the fish sauce brand "Nuoc Mam Chin Su", the instant noodle brand "Omachi", andthe Winmart retail chain,

Masan Group has achieved several outstanding achievements over the years,including:

1 Becoming one of the top 50 public companies in Vietnam by revenue and marketcapitalization

2 Establishing itself as a leading player in Vietnam's consumer goods industry throughits subsidiary, Masan Consumer Holdings, which includes popular brands such asWinMart, WinMart+, and Masan MeatLife

3 Developing a unique business model focused on sustainable development, usingadvanced technology and innovations to reduce the environmental impact of itsoperations

4 Launching Masan MEATLife, a subsidiary leading the way in transforming Vietnam'smeat industry through technology and sustainability

5 Building the largest tungsten mine in the world through Masan Resources, which hashelped establish Vietnam as a significant player in the global tungsten market

2 Masan’s business

Masan is known as a consumer-focused business group with a few key businesspillars that can synergistically provide Vietnamese consumers with a more convenientand rewarding experience as they address their daily basic needs and beyond According

to Kantar World Panel, 98% of Vietnamese households use at least one Masan Consumerproduct in 2020

MCH's revenue in 2020 compared to other consumer companies (unit: billion VND)

MCH is in the top 10 most valuable brands in Vietnam in Forbes 2020 (unit: million

USD)WinCommerce operates the largest nation-wide grocery modern trade retail platform

in Vietnam WIN serves big and essential daily use of Vietnamese people, ranging fromgrocery (WinMart+), financial services (Techcombank), healthcare (Dr Win), and F&B

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(Phuc Long) to telecommunication services (WinTel) WinCommerce also owns WinEco– the largest vegetable & fruit brand in Vietnam that is available exclusively at WinMart,WinMart+ and WIN locations.

BRANDED FOOD & BEVERAGE

Masan Consumer Holdings is one of Vietnam’s largest local diversified FMCGcompanies The company manufactures and distributes a range of food and beverageproducts Masan Consumer Holdings has grown its product portfolio and domesticdistribution channels to establish a leading position in Vietnam’s branded consumer foodand beverage market Its key brands include Chin-su, Nam Ngu, Tam Thai Tu, Omachi,Kokomi, Lovemi, Komi, Cao Boi, Ponnie, Vinacafé, Wake-Up, Compact, Vinh Hao,Quang Hanh, Vivant, Faith and Su Tu Trang According to Euromonitor, MasanConsumer has the largest market share in the fish sauce industry with 29.8%, the secondlargest in the instant noodles industry with 20.0% - just behind Acecook Vietnam(unlisted) and the third largest in the market energy drink market In addition, thecompany also leads in the segment of instant coffee (about 40% market share) with twomain brands, Vinacafe and Wake up

BRANDED CHILLED MEAT BUSINESS

Masan MEATLife is also Vietnam’s one of largest fully integrated branded meatplatforms with chilled meat products using European processing technology andstandards

Techcombank has developed a diversified range of financial products and services

to cater to the financial needs of Vietnam’s emerging consumer class and budding privateenterprises Techcombank has a customer base of about 10.8 million by the end of 2022,equivalent to about 10% of the population using the service

HIGH-TECH MATERIALS

Masan High-Tech Materials is one of the largest private sector mineral resource andchemical processing companies in Vietnam, currently operating the world-class Nui Phaopolymetallic project in Northern Vietnam Nui Phao is the largest tungsten mine in theworld and the industry’s first new tungsten project to be commissioned in over a decade.4Masan High-Tech Materials is also a globally significant producer of fluorspar andbismuth Masan High-Tech Materials’ objective is to show the world that a Vietnamesecompany can lead the transformation of the global tungsten market and is strategicallyexploring opportunities and discussions to become a further integrated downstreamtungsten business on a global scale This will enable MHT to deliver a consistent andstrong financial profile across commodity cycles

B Analysis company’s business ethical issues

1 Ethics in Human Resource Management

1.1 Ethics in recruitment, appointment, employment

Seeing human resources as a competitive force, Masan has placed an emphasis onhuman quality, starting with Attraction - Recruitment - Training and Employee

Development

Increasing awareness of the core values, principles of behaviour and work skills ofemployees since their first day at Masan In addition, Masan also trains staff according tojob needs and specific career development plans for employees holding key managerialpositions and “acute” areas

There is a policy of commitment to transparency in all business activities –

production, displaying quality integrity – transparency for all employees, in a friendly,efficient and transparent working environment

1.2 Ethics in Employee Assessment

Masan decoding talent through 4C:

- Creative solution

- Clear thinking

- Conclusive actions

- Change for results

Masan issues share according to the employee selection program in order to retainkey, heartfelt, competent and experienced employees

1.3 Ethics in protecting workers

Masan always cared about the lives of workers through the means of production andtreatment

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The company limits overtime work, guaranteeing sufficient monthly rest daysaccording to regulations.

Employees are paid full social insurance, and health care in addition to monthlysurcharges, daily support, food allowance, rent

2 Ethics in Finance & Accounting

The reports on Masan’s accounting and financial activities are reasonably explicit.Masan currently owns major shares in Vietnam Technological and Commercial JointStock Bank, commonly referred to as Techcombank, Vinacafe, Vinh Hao Mineral Water,Cam Con Co

Masan’s annual profits are continuously increasing However, Masan did not paydividends to shareholders for four consecutive years Retaining this profit is intended tosupport acquisition strategies and merging other companies to gain scale and marketshare Since then, shares have risen 50 per cent since early 2011, reaching the second-most high price on the market today This non-distribution was approved by shareholderswho did not receive dividends but benefited from stock exchange stock price increasesand the company's strong growth through investments and mergers Generally speaking,Masan's accounting and finance are relatively good

3 Toxic competition

3.1 The "instant noodle war" between Masan and Acecook Vietnam (2011)

In 2011, Masan released their Tien Vua instant noodles and advised customersthrough their advertising that noodles with a dark yellow color were harmful due to theuse of reused oil In a marketing campaign, Masan continued to promote their Tien Vuabeef and cabbage noodles by presenting an experiment that proved any noodles turningdark yellow after being boiled contained harmful coloring agents Thus, customers whowatched Masan’s advertising will receive the message that any dark-colored noodles aretoxic, and only light-colored noodles are good for consumption

As a result, Acecook Vietnam, the company producing noodles with a dark yellowfiber, officially filed a complaint with the Competition Management Agency aboutMasan's advertising clip for their Tien Vua beef and cabbage noodles, which

misinformed customers about the quality of the product Acecook demanded that Masancease their advertising campaign Although Masan spent a considerable amount onadvertising, it was evident that the truth had been exposed, and they were unable tosurpass their competitors in the market

3.2 Masan and the fish sauce scandal (2016)

On October 17, 2016, the Vietnam Standards and Consumer Protection Association(Vinastas) announced the results of a survey that showed 101 out of 150 samples(accounting for 67.33%) did not meet the regulations of the Vietnamese standards forallowed levels of Arsenic in fish sauce products

This information, after being published in the newspaper, received a strong reactionfrom scientists, experts, and traditional fish sauce manufacturers Most of them affirmedthat fish sauce, made from fish, naturally contains organic Arsenic which is not so toxic

as inorganic Arsenic Providing information without specifying that it is organic Arsenic

is a hasty and irresponsible act This disclosure damaged the public's view and degradedtheir trust in Vinastas

On the other hand, Masan immediately presented an advertisement about twocompletely safe brands which do not contain Arsenic In some printed newspaperspublished on October 20, the ads of two brands, Chin-Su salmon flavor fish sauce andNam Ngu fish sauce, stated: “We always believe that fish sauce must be delicious, butsafety is a top priority” This action is a response to the public's concern about whofunded Vinastas to conduct this controversial survey

Therefore, instead of receiving support from the community, Masan confronted notonly traditional associations with hundreds of enterprises but also the longstandingculinary culture of Vietnam This incident caused a huge loss for the Masan Group as itlost nearly VND 2,800 billion in the stock market in just a few days

4 Food Safety

4.1 The story unfolded

On April 2, 2019, the Vietnamese network community was upset by the informationthat 18,000 bottles of Chinsu Chilli Sauce from Masan Consumers Corporation wererecalled in Japan due to the content of benzoic acid, which is a preservative that is notapproved for use in chilli sauce in Japan

The Tokyo City Department of Health and Welfare has carried out inspections ofChinsu Chilli Sauce products imported from Vietnam for the Jarvis Group suspected ofviolating the Food Hygiene Law and the Food Label Act The agency found levels ofbenzoic acid and sorbic acid exceeded permitted levels In addition, because labels do notcontain information about benzoic acid and sorbic acid found in products, it is considered

to violate the Food Labelling Act

Masan Consumers Corporation has stated that it did not export the bottles to JavisCo., Ltd Most likely these products are dedicated to the Vietnamese market only because

on the packaging it is stated "Exclusively for sale in Vietnam Exports are not

authorised.”, or unknown origin

4.2 Conclusion

According to the results of the investigation of the Ministry of Health, in terms oflaw, Masan Consumer does not violate ethics in business because according to thecirculation of guidelines on the management of food additives, benzoic acid is a

preservative that acts against microorganisms, especially mould However, depending oneach country, the regulations for the use of food additives will also be different

Therefore, it is not excluded that a substance is accepted in one country but not in anothercountry

However, in terms of consumer health and community safety, it is once againquestionable whether food standards in Vietnam are lower than in Japan and whether thesafety of Vietnamese is underestimated by profits Because benzoic acid preservativescombined with vitamin C in tomatoes, crushed fruits, and chilli peppers create

carcinogenic benzene and according to the Ministry of Health, chilli peppers still use up

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