UNDERSTANDING OF

THE VIETNAMESE BUSINESS ENVIRONMENT

Dr. Vuong Quan HoangDHVP Research

vuong@vietnamica.net

VIETNAM’S GDP, 1990 - 2009

-

20,000

40,000

60,000

80,000

100,000

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

THE STOCK OF FDI IN VIETNAM(by type of investment, as of Oct. 20, 2009)

Source: GSO and Vietnam Economic Times, 2009. Registration and statutory capital figures in million of USD.

56,527174,71510,805Total

83981Investment holding

4671,7479BOT, BT, BTO contract

1,3544,711183Joint-stock corporation

4,4794,961221Business cooperation contract

15,73354,5642,000Joint venture

34,411108,6348,391100% foreign-owned

Statutory Capital

RegistrationNo. of projects

MAJOR FDI SOURCES

Singapore, 16.9, 10%

Japan, 17.7, 10%

Thailand, 5.7, 3%

BVI, 13.2, 8%

USA, 12.8 , 7%

Hong Kong, 7.8, 4%

Cayman Islands, 6.6 , 4%

Others, 34.1, 20%

Taiwan, 21.3, 12%

Malaysia, 18.1, 10%

S. Korea, 20.5, 12%

Source: Vietnam Economic Times, 2009. (Data point: Country; Cumulated FDI registration; Relative contribution in percentage.

RELATIVE FDI CAPITAL TO GDP vs. REAL GDP GROWTH

0%

2%

4%

6%

8%

10%

12%

14%

1990 1993 1996 1999 2002 2005 2008

Real GDP G/R FDI:GDP

Source: GDP, FDI at current price by GSO 2009, US$ rate by Vuong (2003, 2004).

‘SEED’ CAPITAL• Most Vietnamese business people are enthusiastic

about discussing collaboration opportunities

• Perception: foreigners bring

– Future profits

– AND immediate revenues

• Knowledge of the local market should be an asset for

the potential partnership

• Face-saving keeps Vietnamese business people not

asking for what they really want

`Seed’ capital for long-term partnership

CULTURAL INTERPRETER• There is a gap between what the local

partner proposes what he has done or is

able to do

• “Cultural Interpreter”

– local professional business and

consulting firm

– understanding and expertise of the

business and administrative processes

DISGUISED ENTREPRENEURS• Who are disguised entrepreneurs?

– A bunch of ideas and proposals– NO risk-taking, NO implementing, ect.– Trying to be on the “safe-side”

• Middle man:– Willing to facilitate the foreigners’ smooth businesses

in Vietnam– Gains: profits, business relations, images and brands

• Keep encouraging them to do their best for business collaboration.

STRATEGIC PLANNING AND THE USE OF CONSULTANTS

• Many Vietnamese entrepreneurs set up and start running a new company with:– A list of wishes– No business plan

• New fashion of the Vietnamese large corporations: – Doing “big things,”– Thinking globally, – Developing strategy

• Strategic planning services: a multi-million dollars market• High prices for:

– Well-known consulting brands (experts, professors)– The business owner’s ex-ante strategy – Higher prices of equity

HUMAN RESOURCE MANAGEMENT

Cost-BenefitAnalysis

Short-Sightedness

Short-Sightedness Low quality ofTeamwork and Professionalism

Skills and Behaviorsat work

It is too complicated to show their linkages!!!

Case study: F or P or T is the making of a success story?

• The T- Out of a technology dream, into a technology hotspot

• The P- Reputation is not something in the air, it is on earth– What does FPT stand for?

Food Processing Technology Financing Promoting Technology

• The F- The financials that come last, but never the least

Welcome to Vietnam!