7. VIETNAM OVERVIEW
Geography
• Mainland Size: 331,690 km
• Coastline: 3,260 km (ex. the islands)
People
• Young population - 65% under 35 years old
• Total workforce: ca 45 millions (of 92.7 millions)
Economy
• High growth rates country in Asia
• Member of ASEAN,AFTA,ASEM,APEC and WTO
• EVFTA,AEC …
• One of most liberate economies in the Asia
8. HISTORY
• 4000 years history
• 1000 years under Chinese invasion: very poor
and working hard
• 30 years of wars against the French and the US
• 1975 full liberation: started building the
country
9. DEVELOPMENT MILESTONES
• 1975-1986: Centrally Planned Economy.
• 1986-1996: Doi Moi –The economic reform to
the market economy.Archived 7,5% annual GDP
growth.
• 2000-2007: New Enterprise Law, new investment
law – private sector emerges and grows
dramatically as the main engine for economic
development.
• 2007-today: JoinedWTO in 2007, open economic
policy continues with FTAs (EU, Japan,AEC,
Korea, etc.
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10. VN’S BUSINESS
COMMUNITY
New andYoung
Dominant SOEs:
• Political appointments and
lack of commercial knowledge
• SOEs under pressure of privatization and reform
but very slow pace.
Growth below potential of private sector
• Unfair treated (policy, capital investments, etc.)
• SMEs with great potentials for growth (forecast 1,2
million private entities by 2020)
FDI
• FDI Enterprises are growing (registered new &
increased investments of $20 billion in 2016)
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12. MEETING PREPARATIONS
• Identify right contacts
• Official/formal letter requesting the meeting
• Verify, before leaving your country, that you really will meet right
persons you need to meet
• Prepare sufficient brochures, materials, business cards and
presentations in advance for your business trip
13. DRESS CODE
• Don’t dress too informal
• Northern –Vietnam:The best form of dress is a suit and tie
• Southern –Vietnam: a collard shirt with a tie is perfectly
acceptable (long or short sleeves) as the weather is hot in
the South.
• The higher the position of the person you are meeting, the more
formal your dress should be.
• Woman should wear a nice/proper business dress or a blouse
and skirt/pants. Always cover shoulders and bellies.
14. GREETINGS
• The head of the delegation enters the meeting room first.
• Handshakes are used upon meeting and departing. Handshakes
usually take place between same genders. Sometimes use both
handshakes to show your respect to your counterpart, especially
if they are older (left hand on top of right wrist)
• Always wait for a woman to extend her hand, otherwise a short
nod is also relevant towards your contacts
15. NAMES
• InVietnam the family name
comes first, then the middle
name, then the given name.
TheVietnamese are usually
addressed by their given
names
16. BUSINESS CARDS
• Should be exchanged at the first meetings (with both hands) to all
those attending a meeting.To study your host’s card and clarify his
position will be appreciated.
• In meetings between large delegations business cards are only
exchanged between the most senior representatives.
• When you address the host you should use his title and first name
(professor, chairman, Mr., Mrs., etc.).
• Make sure that your host is informed about the positions of the
main persons in your delegation.
• For entertaining use common sense and ordinary nice behavior.
17. SEATING
• People are expected to sit in hierarchical order. Higher ranking
members sit nearest to their leader.
• The two leaders sit face-to-face or side by side (often in state
offices) depending of the table arrangement.
18. MEETING DISCUSSIONS
• Meetings are opened either by the host welcoming the guest or by the delegation
leader thanking the host for the meeting.Then the two parties introduce their
members.
• The host and the delegation leader manage the discussion.The other members
participate when they are asked to do so by their leaders.
• For the first meeting theVietnamese side normally starts discussions with an
introduction about their company. Be prepared and be patient, it could take a long
time and should not be interrupted.Then you introduce yourself and your
company, before moving on to discussing the main purpose of the meeting.
• TheVietnamese usually prefer going straight to the business point.
• Be sure to ask if you don’t understand any statements made.
19. DURINGTHE MEETING
• Be clear and to the point, but behave politely, no negative attitude (anger,
impatient)
• Follow formalities as local rules, especially Governmental authorities (business
meetings, ceremonies, events, etc.)
• Specific, short and concrete - to the point
• Do not interrupt theVN’s side as it is not only impolite, but may cause
problems for your interpreter. Instead, note down points and raise them when
the other party has finished speaking.
• Ensure good mutual understandings by using a good interpreter
• Prepare to be very specific on prices and terms
20. AFTER THE MEETING
• Make “minutes of meeting” – try to get both parties to sign it
• Follow up with letters agreeing on next activities,
• “Push” ahead (2 steps forward – one step back)
• Use all opportunities for relation building with the right persons
21. USE OF INTERPRETERS
• English is often used for discussion, however it is advisable to
bring your own interpreter.
• Make sure that your interpreter is instructed to translate
everything correctly.This will sometimes give you greater insight
in the discussion than what is formally stated.
• Bring your interpreter to meetings, even if they do not need to
interpret.This will give them a good understanding of the total
situation, and might give you valuable inputs to the coming
process
22. BODY LANGUAGE
• Nodding and smiling while listening to theVietnamese party is a
good way to demonstrate that you are listening.
• TheVietnamese smile like us, but most commonly they smile
when they do not understand.As they are afraid of loosing face
they will not tell you when they do not understand, instead they
will smile. Such a smile is rarely accompanied by nods.
• Remember - a smile can also mean an apology inVietnam.
23. FACEVALUE
• Vietnamese place a great deal of importance on saving face like many other Asian
countries
• Foreign businesspeople tends to be rather straightforward, but this often causes
embarrassment and negotiations may end without a result.
• If you do not understand your counterpart’s English, politely ask them to
repeat or clarify the points they made, rather than to say you don’t understand
their English.
• Never criticize an individual person in the presence of others.
• To give a person credit in the presence of others is giving him face.TheVietnamese
are often using this technique.
• TheVietnamese are a very proud people, and using small successes to give face is a
very good way to build relations and make friends.
25. BUSINESS ENTERTAINMENT
• Meals
• You will often be invited to join yourVietnamese counterparts for lunch or dinner.
Agree to such invitations.Vietnamese often like to discuss business when eating. It is a
part of making a deal, like going to Karaoke in Japan.
• Some might try to make you drunk, so make sure you have good excuse for not
drinking too much.
• The meal is the time to get to know each other personally and build trust and is
especially important for future business
• Social communication
• It is normal inVietnam to ask personal questions like family age or incomes. Don’t be
offended. If you do not want to answer, just smile and change the subject.
• There are very few conversation subjects that are taboo inVietnam. However, you
should avoid discussing politically sensitive matters in public or during interviews.
26. GIFTS
• Vietnamese appreciate gifts given to show respect, understanding and appreciation. Not
necessarily expensive. Gifts are given to build personal relations, and to show that you
appreciate your partners.
• Gifts are expected and should be given during first meetings, high ranking visits or at
special events, normally at the end of events.
• No gifts should be given during signing ceremonies or during public appearances.
• Don’ give a valuable gift to a person in the presence of others
• It is not polite to open the gift when the giver is present
• Gifts should be nicely wrapped. Do not use black wrapping (it is used for funerals)
27. WHAT GIFTS?
• A book, picture or a pen with a motive from your country and/or your company is
OK
• Flowers are OK when you are invited to people’s homes (all kinds, as long as they
are beautiful).
• The value shows how much you respect your contacts
• Practical or useable gifts are appreciated
• No knives or scissors.
• Promotion gifts might be necessary during seminars, exhibitions, etc... to get the
right participants.
• Gifts to the top management: of certain value (watch, phone, pens...)
• Gifts to friends: wine, whiskey, perfume...
• Verify that your gifts are within your ethical standards!
28. PERSONAL NETWORK – SOCIAL RELATIONS
Personal relations are the base for trust, and are vital for doing business inVietnam
Build up your personal network by having regular meetings with business partners
and authorities both on official and non-official cases.Try to achieve meetings with
them whenever you are inVietnam.
Hire local representatives/staff with an established network
Decisions inVietnam are very hierarchical.The BOSS decides
The boss is ALWAYS a bottleneck.
You must always get access to the boss to make any decisions
Hierarchical levels are important;
Top manager relate withVietnamese top manager
Mid manager with his opposite level
Project manager with opposite project management, etc.
29. VERBAL COMMUNICATION
• Face to face meetings are crucial for important issues and building trust.
• Phone calls tend to be brief and to the point only.
• Some managers are still not familiar with the use of Internet and email, preferring
faxes instead. Make sure your requests are written clearly in the fax, and if it is
urgent then don’t be afraid to say so.
• Use contacts inVietnam to ensure that faxes and emails are delivered to the right
persons at the earliest possible time.
30. NEGOTIATIONS
• During negotiations, never let the other party loose face.
• TheVietnamese are tough negotiators:
• Hard to bargain prices – be prepared
• Less attention to quality
• Little awareness of life cycle cost
• You should behave similarly and be prepared to bargain on both price and conditions. Be patient
– don’t give away your bargains too early
• Investigate the “negotiators” in advance to work out your strategy for negotiation
• Use personal relations to influence
• Use local staff/partners to understand what happens and why
• Identify and establish channels that can solve problems
• Yes does not mean “yes”
• Avoid making questions that can be answered with “Yes” or “No”
• Contract signatures
• When negotiations are concluded the contract could be signed immediately if the decision maker is
present. For large contracts normally a ceremony will be organized.
31. THE NEGOTIATION PROCESS
• Usually you can recognize who is “the boss”/chief negotiator.
• The main task for theVietnamese team is to clarify and prepare the contract conditions for
the decision maker.
• Try to clarify the responsibilities of the negotiation team members. However, in reality they
probably have limited responsibility, and you might embarrass them by asking.
• Make sure to establish different channels to be used during negotiations.
• Decision maker to decision maker
• Negotiation leader to negotiation leader
• Technical manager to technical manager
• All the time you should focus on improving your relations and understanding of your local
partners and their behaviour.
32. CONTRACT ENFORCEMENT
• TheVietnamese side might consider the contractual conditions to be very
flexible.The contract is just the “Certificate of marriage”, but the daily life in
the marriage could still be very different.
• Put yourself in a situation where you at all times can control the
contract/project.
• The devil is in the details – so focus on the details.
• Be problem oriented and always look for solutions. It will not help you to be
very strict in your interpretation of contract articles.
• Avoid arbitrations or court processes. Do your utmost to solve problems at
the lowest possible level. Lift them to the next level when necessary.
33. LOCAL RULES - INTERNATIONAL RULES
• “The King’s Law loses against the rules of the
village”
• Adapt to the local rules when joining the
new family”
• Local rules and practices are not always in line
with International rules and practices
• Try to understand and adapt to the local
conditions and rules, but stay within your
approved CSR concept
• Educate your local partners about the
development of the global market and
international trade (however, this takes time)
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34. YOUR BUSINESS OPERATIONS INVN
Whatever you will do you should assume that the whole local community will know about it
Focus on CSR elements when appropriate
• Social Accountability and Ethical behaviour
• Anti-corruption
• Conditions of Employment and fair salary
• Work Environment: protected machines,
chemicals,dust, temperature
• Occupational Health and Safety
• Child Labour (ILO standards)
• Discrimination (Female equality
perspective,etc.)
• Environment (pollution of the external
environment, use of waste)
• Give similar attention towards selected sub-
suppliers
• Support to local authorities (kindergartens,
health,poverty, charity funds, etc.)
35. CO-OPERATIONWITH LOCAL PARTNERS
• Establish a project office as soon as possible
• Ask theVN partner to procure equipment not included in your contract to build trust and give the yard
some extra turnover
• Involve yourVN partner as much as possible in your daily operation
• Recruiting staff. Make sure that you are in control of this process.Your key persons has to be selected by
yourself, including your interpreter. Make your own job specifications
• Focus on people that have good English spoken skills and good attitude towardsWestern working
behaviour, and train them to achieve sufficient technical skills
• However, make sure that your staff will be accepted by yourVN partner, and try to cooperate as closely as
possible with your partner in the recruiting process.
36. CORRUPTION
• Corruption is a problem inVietnam like other developing
countries
• Facilitation costs are popular to smooth the procedures:
• Small payments or gifts
• “Local partners deal with local problems”
• Many companies use agents to handle ”difficult matters”
• The level of corruption ($) is lower than in most other countries
• TheVN Government have launched anti-corruption programs and
start to separate business operations from state bodies
• The anti-corruption division reporting directly to the Party
Secretary Committee.
• Say no to corruption – it can/will backfire some day
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37. HOW TO AVOID CORRUPTION?
• The main reason that many largeVietnamese companies prefer centralized
procurement is to limit the possibilities for corruption at their subsidiaries.
• Make sure that you have 100% control of the procurement process.
• Be aware that corruption might take place when hiring staff.
• To avoid corruption, use any opportunities to strengthen relations and make long-
lasting friendship withVN partners.
38. ETHICAL BEHAVIOUR
• Be an example for your local staff, and make sure that they follow your rules. (“Talk
the talk and walk the walk”).
• TheVietnamese internal connections are very complicated.They will try to bring in
their family or friends if they have the chance.
• Staff with high level connections will be difficult to manage for mid-managers with
lower connections.
• As a foreigner you must assume to be watched at all times.Therefore, behave in such
a way that your actions can not be used against you.
• Vietnamese workers have shown a strong willingness to learn.Therefore, give
positive and constructive feedback, and they will adapt and improve.