Despite the attractive potential Vietnam carries, people need to take into consideration the cultural differences between their own and the Vietnamese that can impact their ability to succeed to invest in Vietnam. We talk to Vanessa Doan, a business culture consultant at OML Consulting, about the reasons why people should consider investing in Vietnam and certain cultural and business etiquette that people should be equipped with when doing business in Vietnam.
Could you share a little bit about who you are and what you do here at OML Consulting?
Vanessa: My name is Vanessa Doan and I’m a business culture consultant at OML Consulting, covering the Vietnamese market. My job leans more towards the business development side. Part of my role includes outsourcing for contacts, helping Vietnamese companies in Vietnam to get funding from the Singapore government, mergers and acquisition, and helping to export PPE products from Vietnam to international markets. I am also teaching Vietnamese in corporate settings to help my clients with business opportunities and to better understand the culture.
Why do you think companies should invest in Vietnam instead of other countries in the region?
Vanessa: The Vietnamese economy is rapidly growing, especially right now due to the good management of the COVID-19 pandemic there. As the COVID-19 situation in Vietnam is well under control, it presents an opportunity for other countries to look into Vietnam. Vietnam also has a relatively low labour cost and provides attractive tax incentives, so these factors encourage foreigners to invest in Vietnam. Moreover, Vietnam has a young population that is also hardworking and intelligent, making it an attractive place to do business and invest in.
What is one mistake that people make when investing in Vietnam? How can they alleviate the consequences of that?
Vanessa: Coming from my perspective as a culture consultant, I find that people don’t understand the Vietnamese culture well. This is because the Vietnamese culture is different from the cultures of other countries; it’s more focused on relationship building.
You must know the culture well, and know a little bit of Vietnamese so that you will be included. There are a lot of cultural etiquette expectations, especially in business settings, that foreign investors need to pay close attention to when intending on doing business in Vietnam.
What are some resources that you would recommend to help people understand the culture a bit better?
Vanessa: There is a website called Vietnam Insider that shares news about Vietnam and gives people an insider view of the country. People can also look into a few law firms that specialise in investments. They usually have great resources for foreign investors. Moreover, some of these law companies will offer some basic Vietnamese language, culture, and social etiquette lessons to help investors be more prepared.
Could you share some common business etiquette that people should take note of when doing business in Vietnam?
Vanessa: The Northern Vietnamese lean more towards the white-collar culture, meaning that they are more formal. So when you go to a business meeting in the North of Vietnam, especially during the winter months, it will be better for you to wear a white shirt, together with a tie, and coat. For the Southern Vietnamese, it is more relaxed but still advisable for you to wear a long-sleeved shirt.
When you present your name card, you should hold it with both hands and give it to the most senior person in the meeting room first. When your Vietnamese counterpart gives you their business card, you should take the time to read through their business card first rather than tucking it into your pocket immediately. While having a business conversation, you should stay engaged by listening actively, nodding your head and smiling. Moreover, you should be humble as showing humility is very important when doing business in Vietnam.
Do you have any last words to share?
Vanessa: I would like to end off by saying that Vietnam’s economy has grown tremendously so it is time for you to invest in Vietnam before it gets too late. I have been observing that more and more people are interested in doing business in Vietnam. When I teach Vietnamese, I do see a strong interest in the language. This is the case for people seeking employment as well as Vietnam is striving to be another Silicon Valley in South East Asia. That is why many engineers are picking up Vietnamese so that they can stand a higher chance to work in Vietnam as an IT engineer.
Some people are also picking the language up to help run a business in Vietnam. For some entrepreneurs based in Singapore, they are able to take advantage of the government’s grant for business expansion. Therefore, many companies in Singapore are looking to expand their business in Vietnam, because of its close proximity to Singapore in terms of geographical location and culture.
Vanessa Doan is a partner at OML Consulting and cross culture business consultant, providing assistance to form connections among businesses in Singapore, Vietnam, and Europe. As a native Vietnamese, she assisted Kiên Giang and Phú Yên province with access to Singapore government bodies and other associations in Singapore related to seafood export and tourism development.
Could you share a little bit about who you are and what you do here at OML Consulting?
Paul: I’m a management consultant with 15 years’ experience in management consulting. My time in consulting includes a stint with the Boston Consulting Group in Australia, and with A.T. Kearney in Australia and South East Asia.
For the last seven years or so, I’ve been working with Liang Tan, the CEO of OML Consulting, on various projects prior to OML Consulting’s launch, and now with OML Consulting. I am primarily involved in strategy which includes business strategy for corporate clients, as well as mergers and acquisitions (M&A) projects for private equity and corporate clients. I also assist OML Consulting in a range of ways, including proposals, internal strategy and policy, and providing input for decisions on key topics.
I got my start in management consulting in Australia in 1994. Between then and now, I went to the Melbourne Business School, worked with Boston Consulting Group and A.T. Kearney, spent some time working in the entertainment industry, moved to Singapore about 10 years ago, and after about a year and a half there, moved to Thailand. I’ve been here for quite a while now and represent OML Consulting in Thailand. However, I contribute to projects outside of Thailand as well.
What are the two most interesting projects that you have worked on?
Paul: That’s quite a hard question because I’ve done a lot of projects and that’s like saying: “What are your two most interesting children?”, or “Which child do you love the most?”, which is quite a difficult question to answer. But I can give you a couple of examples of interesting projects.
One of them was a large project for a university in Australia. That was an organisational transformation and included process reengineering, headcount reduction, and procurement optimisation. We had a fairly large team — I managed a team of about 10 consultants, plus 3 additional team members contributed by the client. It covered a broad range of non-academic departments and their associated headcount in the university. So you’re looking at things like finance, IT, maintenance, procurement, and some other functions.
Another category of projects I do a lot of work in is strategy projects. One that was very interesting was a strategy project for a satellite company that spans most of Asia and Australia. We did strategy work for them, looking at 11 markets, and doing a deep dive into certain markets to really understand the details for those key markets. That took me to three different countries travelling on that project, and there were also other team members travelling to other countries that were in scope. So that one was a full strategy piece in the sense that we did the market assessment, the competitive analysis, gained an understanding of the company’s capabilities and situation, and then developed the strategy for the company to enter new markets and to grow within the markets they were already in.
That project was actually a fairly long one compared to the relatively short projects that I’ve worked on like the M&A due diligence projects that I’ve led for private equity firms. Those ones are typically tight, intense, three-week projects where you do a lot of the same work that is in a typical strategy project. However, the main focus is to assess the acquisition target and to determine whether there are any red flags or issues that the potential acquirer should know about, which could lead to them calling off the transaction or could change the valuation that they offer to the seller to acquire the company.
The similarities with major strategy projects are that you look at the market and competitive situation, and you understand the target. The main difference is that you don’t really have to develop a full strategy for entering a new market or growing the business. You might think of high-level ideas or initiatives that might be implemented post-acquisition, but primarily, you’re looking at understanding the target or asset to help recommend whether the potential acquirer should continue with its acquisition process.
What is one mistake that organisations make when trying to enter a new market? How can they alleviate the consequences of that?
Paul: I think a lot of organisations don’t really want to budget adequate market assessment, market analysis, and competitive landscape research before they go into the market. It appears that many companies want to hit the ground running and start selling. What happens is that they may actually spend a lot of money to put resources on the ground, hire people, maybe put an office there, because they are excited about the market. But they haven’t really analysed it in-depth to fully see what they can and should do, whether it’s an attractive market to enter in the first place, or how it compares to other markets they can spend their money on.
So if you look at investments, a company always has a broad range of potential investments that they could consider. Some of them can be new market entry, but some of them can be other things that compete for that investment money like new product development, marketing, investing more within its existing markets such as potentially acquiring a company within existing markets, or moving into adjacent segments or industries. These are just some examples of where investment dollars can be utilised that would compete with putting the money into entering new markets. It’s difficult to analyse the universe of potential options but I think it’s prudent for a company to look at those options and weigh up new market entry versus other potential investments they could make.
You might narrow it down and say: “We have a separate budget for market entry, and a separate budget for product and R&D. We won’t have a mixed investment pool which will have R&D projects competing with new market projects”.
But even if you were to split it off, there are multiple initiatives within the revenue growth category that could be considered, like growing in your existing markets, inorganic growth via acquiring targets, or organic growth into new markets.
If you’re looking at new markets, then you should weigh up which markets you should be investing in and how much in each one. Broadly speaking, you should at least consider a detailed analysis of the market you have a primary interest in, to determine if it is a market that you should enter, and how it compares with other options.
It may sound a little self-serving from a consulting firm’s point of view to say that corporations should hire consultants to help them do this. We’re not saying they must do this in every case. Certainly, some corporations have plenty of internal resources that can be applied to the problem of analysing and selecting the most attractive markets to enter. But if they are stretched for resources, then consulting firms are one option they can look at to assist them with analysing those markets.
Some of the other advantages of consulting firms can be that perhaps they have greater local knowledge. They may have people based on the ground in those countries, whereas the potential client doesn’t — or the consulting firm may have good access to local information that can shore up data gaps.
Could you share some advice to companies looking at entering a new market?
Paul: We would be pleased to have complimentary free discussions with interested parties.We can assist with thinking about investment options, comparing the target market you’re looking at entering to other potential markets that you can enter, and how to allocate adequate internal or external resources to the issue.
About the Author:
Paul Tan has 20 years of professional experience, including over 15 in management consulting. He has previously led numerous engagements for private equity and fund management clients, providing leadership for due diligence and transaction advisory engagements, on both the buy- and sell-side of acquisitions. He has also led a wide range of market entry and growth strategy engagements, market assessments, and organizational transformation projects for major corporates and government-owned entities.
Paul’s experience spans most of Asia and Australia, working with multicultural and cross-functional teams. He has delivered substantial impact for his clients, interacting with senior leadership and key stakeholders, developing valuable knowledge and capabilities over the past two decades of his consulting career.
How we can help clients quickly scale up and enter new markets: a Singapore biotech case.
Singaporean bio technology company is launching COVID-19 tests globally in March 2020
The client is looking for a third party, who is able to quickly scale up and enter in different markets identifying suitable local distributors, who are able to handle product registration with local health authorities and identify sales opportunities.
Identifying New Markets
The first two weeks were spent on identifying which markets would be interesting; LatAm, Benelux, and Indonesia were selected.
For each country, local partners were identified to make a market scan and assessment of the sale potential.
Together with the client, we decided on a product strategy and business development plan.
Within 3 months, we signed up distributors/agents in 5 countries; setup sales teams in Ecuador, Argentina, Colombia, and Indonesia
We were able to generate a key leads list and simultaneously assisted our client with successful product registration in all 3 LatAm countries within 3 months on a fast track and provisional health authority approval (ARCSA, ANMAT, and INVIMA)
We successfully shipped out product samples to all 3 LatAm countries and tested any issues with a specialty “cold-chain” shipping company, in order to identify any potential bottlenecks.
'Are you looking to scale quickly into new markets? Through our global network we connect you with the right markets.'
How we tap into deep expertise at front-running companies to inform strategy of our clients: a China medtech case.
As part of an assignment for the chief economist’s office of a global governmental financial institution, multiple industries in China were to be mapped in order to provide data and insights as inputs into a governmental strategic plan
Our effort was focused on the biotechnology sector in China
Objective was to gain insight into level innovation capabilities of one of the largest biotechnology companies in China
High Level Insights
Our task was to identify and gain insights from a senior board level executive at a specified Chinese biotech firm, who needed to be available for a one on one in-person interview.
Within 1 week we found and recruited the executive, flew in and organized the meeting, as well as arranged for a translator to attend the session.
The interview was recorded, and transcribed, providing the client with detailed answers on all the question sets that were prepared.
Within 2 weeks, as part of a larger global study, we were able to map out key elements of how company level innovation capabilities were realized at this biotech firm.
Prior to the interview, a significant portion of the time went into screening the profiles of the executives and to understand which person would be the most appropriate person to interview.
This report, together with inputs on other industries, allowed the client to compare different technology industries and how company level innovation capabilities are developed and expanded.
'Contact me to find out how we can assist you gathering relevant intelligence for your organisation.'
How we help companies find assess foreign markets: an Australian-Thai case in the logistics and packing industry.
Industry: Logistics and Packaging
Large Australian company with global operations.
This project focused on Thailand as the client wanted to enter or expand its business in key Asian markets.
This Project was completed using a combination of targeted customer and expert interviews, secondary research, and analysis by the engagement team.
With respect to customer and expert interviews: to comply with confidentiality rules and regulations, the interviewers had experts respond to externally sourced data and describe qualitatively the strategies or characteristics of various industry players.
Where exact data was not readily available, the team developed estimation models (e.g., top-down and/or bottom-up) and further validated these via third party sources.
Formal update meetings plus more frequent informal communication with the client enabled effective feedback to ensure outcomes met and exceeded client expectations.
Market overview, with details of size and growth including a 5-year forecast, identification and forecasting of key market drivers, and detailed breakdown of market characteristics across 14 dimensions e.g. standard sizes and materials of pallets; quality grade/durability types present in the market; customer sourcing decision making criteria and process; factors considered for supplier selection.
Customer segmentation, by industry, in the Thai market and for client’s customers and prospects; segment prioritization based on growth and share of existing pallet stock; segment affinity for specific pallet types.
Sales approaches and issues: identification of 6 main approaches and methods within these; identification and elaboration of 4 key untapped business opportunities in the Thai market; analysis of 6 key market or client-specific issues, effects and potential solutions.
Manufacturers/competitors and indicative pricing: analysis of competitive landscape; information on market price ranges for various quality-grade pallet types for purchase and rental; additional data on suppliers’ minimum order quantity and other terms and conditions.
Revenue opportunity: estimation of potential revenue available to the client factoring in competitive positioning, market pricing, stock levels, etc.
Customers: list of 38 key customers/prospects by industry segment with profiles covering potential for purchase; current usage of pallets by type; additional details e.g. who they purchase from, preference for rent vs buy or intended changes in the future, budget for upgrading from timber to plastic pallets, etc.
'Looking to expand your operations? Connect with me to find out what we can do for you.'
How should companies mitigate potential cultural impact and media coverage?
How can employees minimize the negative effects of offshoring on their own situation?
How should companies approach offshoring?
In the few short months of early 2020, COVID-19 has resulted in global workplace upheaval. Numerous jobs have been lost or furloughed, and a significant number of employees have been shifted to working from home. Today’s article deals with this latter group.
In the past, companies have typically required workers to show up at the office, for a variety of reasons. A non-exhaustive list includes:
Not trusting workers to be productive from home
Job requires access to certain equipment not available at home
Company wanting to ensure that workers put in the contracted number of hours
Company belief that cohesiveness is best served by interaction at the office
Senior management belief that face to face interaction is more effective than remote
Yet over time, there has been a slow shift toward increased remote working. Some jobs have, for a long time, already required extensive travel — for example, salespeople, regional corporate roles, and management consultants. Others are equally (or perhaps more) effectively performed from home or a remote location, like customer service via phone, software development, and content writing. It is clear that, for some roles at least, remote work ranges from “necessary” to “optional but equally effective versus office work”.
With COVID-19 having forced many companies into at least a partial work-from-home mode, these organizations have worked out methods to continue doing business to a workable level of effectiveness and efficiency. They may have discovered that some roles and staff are better suited to working from home, and may have considered a permanent shift for these roles. There are some obvious benefits including reduced office costs e.g. rental, utilities, equipment like desks and chairs, consumables like tissue paper and coffee; elimination of commuting time and cost; and others. There are some less obvious benefits like saving on childcare and time spent with family. There are also some negatives, including stress (workers report that this comes with increased time spent with the children — however, this is partly due to homeschooling during COVID-19), reduced social interaction with colleagues, reduced sense of support from superiors, and others.
Offshoring means moving jobs out of the country, and comes in two flavors — offshoring to a foreign location of the company either pre-existing or new; and offshoring plus outsourcing to a foreign located 3rd party. In both cases the primary goal is to reduce cost, shifting labor from high-priced local labor to a country that can deliver the work at a lower cost and at an acceptable level of performance. The level of performance is judged by criteria which may include quality/accuracy, speed/timeliness, communication, and others. For the purposes of this article, we are primarily referring to offshore outsourcing, where not otherwise specified.
In a situation where companies have realized that at least some of the jobs that are being performed remotely under COVID-19 are highly suitable for remote work, they will observe potential for reduced cost. Taking rental as a prime example, each person may occupy a 2x3m cubicle at the office. Enough jobs moved to home means reducing office footprint and rent, as sections may be returned to the landlord, or the company could move to smaller premises.
But why stop there? If you have decided that people can work from home, do they even need to be in the same country as the office? Call centers and IT are typical departments that are often offshored to India, the Philippines, or other countries with appropriate capabilities. Labor costs can be reduced by 80–90% for many roles, e.g. data entry and customer support. However, after taking into account additional management costs, telecommunications and other costs of remote work, companies can achieve net cost savings in the 50% range. Offshoring also offers the opportunity to re-engineer business processes, which can add another 30–40% saving on the total offshore cost base (i.e. ~65%+ saving in total compared to the original home-country cost base).
Sometimes the performance or customer perception of these initiatives can be slightly negative, but a combination of increasing acceptance and familiarity with foreign service providers, and gradual performance improvement through training (e.g. accent and fluency training for call centers) usually yields acceptable results. These results plus the reduced costs can combine to be a long term preferred option. Reduced internal organizational complexity via outsourcing to a 3rd party is another potential benefit.
What will the future look like?
Let’s fast forward for a moment and visualize what the world will be like after post-COVID offshoring. In some organizations, offshoring has already moved manufacturing facilities; support functions like IT, accounting and finance; and even some strategic functions like R&D and new product development, to foreign locations. However, numerous roles previously thought of as best suited to working at head office or other domestic facilities have remained in-country.
Under COVID, senior management will likely observe that, when these roles are performed remotely, they can be categorized into low, medium and high effectiveness. Those with high effectiveness may even exceed their normal performance. These roles make the most sense to keep as remote roles, and are the prime target for offshoring consideration. The medium-effectiveness roles, with some adjustment, will be a secondary target. Low-remote-effectiveness roles will be the ‘core’ that is best suited to work at the domestic facilities.
If high and medium effectiveness roles are shifted to home or offshore, company facilities will be significantly smaller. This will vary by company, but only 3.4% of workers currently work remotely (USA data). However, this figure is increasing at a fairly fast pace. Also, note that some jobs could be partially performed remotely, e.g. 3 days from home, 2 days at the office; or 60% performed by an offshore 3rd party, and 40% performed by a critical ‘core’ worker in the office. Technology including faster internet, webcams, video conference services, shared online workspaces, instant messaging, and others have made it a lot easier to be effective remotely. 3.4% of roles being remote today leaves much room for change.
Envisaging a shift of 30–50% of on-premises roles in big corporations to home or offshore locations means a major downsizing of facility sizes and physical workplace interaction. Bosses will have to become more effective at managing physically dispersed employees and service providers, potentially in various time zones. Employees will have to be disciplined and conscientious or else perform sub-optimally. They will also have to be more comfortable with reduced face to face supervision and guidance, but this can be substituted by online communication. Everyone, whether at home, offshore, or in domestic offices, will be dealing with a mix of locations, cultures and roles that may be substantially more diverse than in the past.
In terms of locations for offshored activity, India has been a strong player in recent decades. However, Latin America and Europe can expect to capture significant growth going forward. There is an increasing focus on process and people as opposed to simply seeking the best price. If offshored service providers can deliver ease of process and talented workers, they will attract customers that are willing to pay more for a premium, high quality service.
How does offshoring impact current employees?
There will likely be substantial negative impact on the current workforce, and this is critical for companies to understand and manage in the process of offshoring. Existing local employees will likely feel upset, stressed, and anxious, as they will feel they are being replaced. They will fear financial issues they may face in the future, and the uncertainty can be more stressful than clearly knowing they will lose their job. It may also confuse those who don’t understand why the organisation is outsourcing particular tasks and jobs. In addition, offshoring will certainly change, and likely add challenges to, the daily workflow of employees that remain post-offshoring. The impacts on individual employees can sum to a sizable negative effect on company culture.
How should companies mitigate potential cultural impact and media coverage?
It is vital that company leadership protect the organization against cultural impacts by discussing their decisions with team members who could be impacted. Leaders must be mindful that the loss of employment is being imposed on team members, who have little or no choice in the matter.
Planning the sequence and content of communication is critical. During the initial phases, often the offshoring project is kept secret, to avoid alarming the workforce unnecessarily. Confidentiality must be maintained by the internal project team and external consultants who may be involved. After all, it is possible that the diagnostic will conclude that offshoring is not viable or appropriate. However, once it becomes clear that the company intends to go through with offshoring, it must decide when to reveal this information to the affected portions of the workforce. The timing, method and content of this process must be clearly set out in the communication plan, and implemented correctly.
Techniques used to achieve desired outcomes include:
Offers of outplacement services and counseling for impacted employees — these can reduce the challenges displaced workers face
Above-contract/regulation termination packages
Voluntary redundancy which enables employees to have some self-selection, since those who want to leave will opt in
Inclusion of key team leaders in the project from inception — this assists in achieving buy-in and understanding of the need for the project
Further, management must proactively shape positive media coverage around the offshoring to ensure there is an accurate perception of the situation, being in the best interest of the organization and its team members. If the company has a high public profile and is a major employer in its local market, major objections can arise. Proactive engagement with media and other community stakeholders can pay dividends in defusing such objections.
How can employees minimize the negative effects of offshoring on their own situation?
Employees in the post-COVID-19 world should keep an eye out for the potential for offshoring in their organization. If there is a meaningful likelihood of their role being offshored, some ways to mitigate the effects include:
Gaining broader knowledge of the organization to display own value
Improve own job performance; make suggestions for positive change, including cost-cutting and innovative actions
Be part of a team to expose own skills to other departments
Upgrade own education/skill set to gain or enhance leadership skills
Network with decision-makers
Connect organizational resources and people with each other — focus on relationship skills and project management
Bring in revenue by accessing new business opportunities — get close to the customers
Exceed work expectations every day
The above ideas will hopefully make the employee more valuable to the organization and less likely to be rationalized as part of an offshoring effort. However, if it appears likely that one’s role will not be retained, it is time to research and access new employment opportunities inside and outside the organization, fine tune the resume, and seek interviews.
How should companies approach offshoring?
There are five main steps:
1.Diagnostic Assessment — determine whether a significant portion of roles are effective remotely. This is done by extracting key data from the personnel database, including division/department, position title, employee name (or Currently Vacant as appropriate), and total salary package. Roles are then grouped into high, medium and low remote effectiveness. This enables assessment of the total number of roles and total cost of the roles in each category. If a substantial portion of roles fall into “high” and “medium”, and particularly if they are concentrated in certain departments or business units, there is likely to be substantial outsourcing/offshoring opportunity.
2.Impact Analysis — for high and medium categories, estimate potential cost savings and other impacts from outsourcing/offshoring (“O&O”) options. These options include in-house offshoring, local outsourcing, and offshore outsourcing. The cost impacts must consider both one-off and on-going costs. One-off costs include retrenchment and the setup and transition costs of O&O. Ongoing costs impacts are primarily the differential between the annual cost of having the role performed under the status quo and under the newly considered options, and any overall management fees an outsourced services provided may charge. Non-financial issues and impacts should also be assessed, e.g. morale, effectiveness reduction, strategic importance of roles — and where appropriate, an estimate of their financial impact can also be developed.
3.Decision Making — decide whether the targeted benefits are sufficient to engage in an O&O program. Clearly define the scope, goals and high level timeline of the O&O program. Select areas and roles to undergo O&O, what type of O&O to implement (from the options mentioned above), and prioritize the major components of the program.
High Level Roadmap — develop overall roadmap and initiatives, with priority initiatives in particular being allocated earlier timeframes, adequate budget, and high quality resources to manage these initiatives.
Implementation Planning — detailed steps for each initiative so that costs are effectively controlled, output quality is ensured, and targeted time to completion is achieved.
5. Implementation — this component itself comprises multiple steps, to be applied for each impacted area of the company.
Assign roles and launch initiatives.
Assess and confirm O&O option. Considerations include: offshoring includes deciding whether to use existing facilities or build new owned facilities, or outsource to 3rd party.
If outsourcing, identify the shortlist of service provider options, profile them, select those who you want to bid, prepare bid documents/RFP, receive proposals, assess proposals, determine the winning bidder, and finalize contracts.
Define the exact processes — process maps and procedures; KPIs; inputs/outputs/data items; data security requirements; service level agreements; control, monitoring and evaluation; knowledge transfer, etc.
Implement transfer of work processes and knowledge, using the implementation plan and the process definitions.
Commence live operation. There will likely be a short period during which the original resources will remain in place to assist with any issues, until the operation is running smoothly.
O&O ranges in scale from small to very large, and the potential benefits are commensurate. The larger the project is, the more challenging it is to achieve success. Some companies will have already gone through these processes and have the capability to implement them without assistance. Others will have strategic project teams, essentially internal management consultants, that can take on these projects. For companies that lack the resources to assess and implement offshoring, assistance is available from consulting firms which have assisted clients with successfully completing such projects.
If your organization is considering outsourcing and offshoring and may need assistance, please contact us at OML for a complimentary 30 minute discussion. We would be pleased to help talk through your company’s needs and how to address them. Our offering spans diagnostics, planning and implementation to counseling, coaching and advisory for management and affected employees — all of which can help you deliver maximum value with your O&O efforts and avoid pitfalls. Please email [email protected] to connect with us.
About the author
Originally from Australia and now based in Thailand, Paul E. Tan has 20 years professional experience, of which 15 have been in management consulting. Previously employed by The Boston Consulting Group and A.T. Kearney, he assisted in founding OML Consulting with partners in Asia and Europe. His work has focused on business strategy and organizational transformation in Asia and Australia.
China may not seem as favourable for market growth in the post-COVID era
Vietnam may begin a stiff competition with China for foreign investment and trade
Entrepreneurs and businesses may want to take advantage of the Vietnamese market as the country enters an economic boom
There are some things to consider when attempting to begin operations in Vietnam
OML Consulting can help you optimise your entry into the Southeast Asian country’s market
While global markets continue to change in the midst of the COVID-19 pandemic, there is one thing almost certain: China continues to struggle, and Vietnam is picking up its northern neighbour’s slack.
Many companies, both big and small, are beginning to see Vietnam as a viable production center in Asia, launching what may soon become a foreign-investment competition between China and the Southeast Asian country. In fact, Nikkei Asian Review reported earlier this year that tech giants Apple, Google and Microsoft are set to move their phone production plants from China to Vietnam, a shift that stems from the instability of the Chinese market at the height of its virus outbreak at the beginning of 2020.
The large companies that have decided to take advantage of Vietnam’s young, innovative market are not only opening manufacturing plants in the country but will also invest heavily into the country’s economy, helping build infrastructure and provide monetary resources to the nation. This shift potentially marks Vietnam as one of the economic centers of Asia. It is here that entrepreneurs and small businesses may find opportunities to enter the APAC region for a fraction of China’s entry costs.
Even though most people look up to big brother China, Vietnam has been trailing China in terms of GDP growth in 2nd place since 2000, according to the World Bank. From 2019–2020, it will most likely outperform China, an economy which has been put under a lot of pressure. Vietnam’s free trade deal with Europe most likely acts as a primary reason for the country’s impressive forecasted market growth. Hanoi approved the EU-Vietnam Free Trade Agreement earlier this month on June 8th, which will phase out up to 99% of tariffs over 10 years, according to Nikkei Asian Review. The trade deal can take effect as early as August and is expected to boost the nation’s manufacturing and exports sectors as it recovers from the pandemic.
If you are planning to explore and/or start operations in Vietnam, there are several things that are important for you to consider:
Understanding the market: what is the product or service that you are trying to offer in Vietnam? What is your added value as opposed to potential competitors? In terms of cost, is your pricing competitive and attractive for your Vietnamese customers?
Where to start?: are you a manufacturer and need to set up production facilities? Are you providing e-commerce solutions? Or do you need a local distribution network? It all depends on the type of business that you run.
Location — Hanoi, Ho Chi Minh City or elsewhere: Hanoi is the capital of Vietnam, but Ho Chi Minh City is leading in terms of business. It is comparable with China where Beijing is the capital, but Shanghai is more important for business. However, if you want to reduce your capital expenditure, you may want to invest in office locations just outside of these major cities or in special economic zones with tax benefits and other incentives.
Skilled labor/personal: a key factor to a successful business is being able to attract talented, well-educated, and motivated employees. The cultural and language differences are important hurdles that you need to take into consideration.
Cash management and taxes: the Central Bank of Vietnam has strict regulation with the in- and outflows of money. Before you set up your business in Vietnam, you need to understand what is needed to bring money into the country. More importantly, if your business is profitable, how can you extract money out of Vietnam? To do business in Vietnam, you also need to abide by the local taxation regulations, which requires additional attention.
How can we help you in Vietnam?
In order to optimize your investment, it often pays if you spend some of your budget to have a market study or market research done prior to firming up your plans to move in. We assign an advisor, who will help the client retrieve relevant insights quickly, so the client and the board can make intelligent decisions.
If the client knows what they are looking for, when entering the market, we can help with scouting for the most convenient location for the business operation. We are in contact with local government officials and can share with you the benefits that they offer.
The next step will be to help guide and assist in the setting up of the office and/or business. We provide a local team that speaks English well but also understands the local business culture well.
If the client needs us to assist with recruitment of local staff, as well as training of the staff, we work closely to define the requirements and competence levels. Once staff members have been hired, the training process starts, we will be able to provide tailored staff development programs.
During the entire process we have one of our senior partners and/or functional experts involved. We make use of online collaboration tools to minimize the use of e-mails and optimize the interactions with the team, so that you are up-to-date on the process every step of the way.
For a private investor who recently approached us for our expertise in helping him kickstart his investment process in Vietnam, we implemented an elaborate three-step plan to help meet his goals. First, we arranged a meeting with him to better understand his business requirements and concerns. Second, we completed thorough market research through direct and reliable sources to ensure that our client’s needs were met. Last, we traveled several times to Vietnam with the client to visit suitable properties for his investment, providing him with our savvy advice and recommendations throughout this process. We also helped him with all the relevant documentation to ensure a seamless and painless transition. The client greatly appreciated our assistance and advice and expressed his interest in working with us again for his future investments in Vietnam.
OML your trusted partner
Are you looking to make your first step in Vietnam and want to take advantage of one of the fastest growing markets in Asia for decades to come? Please contact us TODAY for a free consultation and we will be happy to assist you. You can book your appointment by emailing [email protected] or [email protected].
About the authors
Liang Tan is the founder of OML Consulting and has worked in the hospitality and technology management consulting industries for about two decades. He has provided consulting services to a variety of clients in different industries, ranging from technology start-ups to government institutions. Clients in Vietnam are in the hospitality, construction and real-estate industries. With focuses on delivery, operations, product development, and strategy, he strives to assist clients in business excellence.
Vanessa Doan is a partner at OML Consulting and works as a cross-cultural business consultant, attempting to help form connections among businesses in Singapore, Vietnam, and Europe. She has recently helped a client with investments in residential real-estate in Ho Chi Minh City. As a native Vietnamese, she is using her expertise and local connections to actively assist overseas buyers to outsource PPE suppliers in Vietnam to export to Europe and South America amidst the COVID-19 crisis.