VIETNAM(THE SOCIALIST REPUBLIC OF

VIETNAM)

Francis Piron, Ph.D., 2013

VIETNAM• BRIEF HISTORY• 20TH CENTURY• THE COMMUNIST PARTY OF VIETNAM• Đổi Mới (RENOVATION)• MAJOR INDUSTRIAL SECTORS• MANAGEMENT STYLES IN VIETNAM

• BRIEF HISTORY• LONG COLONIZED BY CHINA UNTIL 10TH

CENTURY• IMPERIAL DYNASTIES• MID- 19TH CENTURY-MID 20TH CENTURY:

COLONIZED BY FRANCE• HO CHI MINH (NEXT SLIDE)

• DIVISION BETWEEN NORTH (COMMUNIST) & SOUTH (NATIONALIST) VIETNAM

• US-SUPPORTED VIETNAM WAR (ENDD IN 1975)

VIETNAM

• HO CHI MINH• BORN IN CONFUCIAN FAMILY

AND CONFUCIAN-EDUCATED• LATER, FRENCH EDUCATION• MARXIST REVOLUTIONARY –

FOUNDING MEMBER OF FRENCH COMMUNIST PARTY

• TRAINED IN MOSCOW AND IN CHINA

• FORMED THE DEMOCRATIC REPUBLIC OF VIETNAM

• LED THE VIET MINH INDEPENDENCE MOVEMENT

• NOW THE OBJECT OF A PERSONALITY CULT

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• 20TH CENTURY• 1975 – END OF THE VIETNAM WAR• COUNTRY WAS RAVAGED BY DECADES OF WAR BUT

UNIFIED UNDER THE NORTH’S COMMUNIST REGIME =>• MASS COLLECTIVIZATIONS => ECONOMIC COLLAPSE,

TRIPLE-DIGIT INFLATION, MASS EXODUS (BOAT PEOPLE)

• INTERNATIONAL, POLITICAL ISOLATION• 1978 - INVASION OF CAMBODIA• 1979 – BORDER WAR WITH CHINA• 1986 – ECONOMIC & POLITICAL REFORMS LEADING TO

INT’L REINTEGRATION• 2000 - DIPLOMATIC RELATIONS WITH MOST NATIONS• 2007 – VN JOINS WTO

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• THE COMMUNIST PARTY OF VIETNAM• VIETNAM IS A SINGLE-PARTY STATE• NEW STATE CONSTITUTION (1992)• CENTRAL ROLE OF CPV IN ALL ORGANS OF

GOVERNMENT, POLITICS AND SOCIETY• WHILE OFFICIALLY COMMITTED TO SOCIALISM,

IT IS INCREASINGLY CAPITALIST (READ “A BIT OF EVERYTHING –

VIETNAM’S QUEST FOR ROLE MODELS,” THE ECONOMIST, 4/8/2008)

• “the Party, the nation, the people”

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• Đổi Mới – (RENOVATION)• 1986 – “SOCIALIST-ORIENTED MARKET ECONOMY

• PARTIAL PROCESS OF DECOLLECTIVIZATION –INDUSTRIAL AND AGRICULTURAL SECTORS CAN BE PRIVATELY OWNED AND OPERATED

• THE STATE (i.e., COMMUNIST PARTY OF VIETNAM) PLAYS A DECISIVE ROLE IN THE ECONOMY BUT PRIVATE ENTREPRISES PLAY A MAJOR ROLE IN PRODUCTION)

• ACCOMPANIED BY SOME PERSONAL FREEDOMS

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• THE ECONOMY• 1997 ASIAN FINANCIAL CRISIS• GOVt HOLDS TIGHT REIN OVER MAJOR

SECTORS (BANKING, FOREIGN TRADE, …) SOEs• JULY 2000 BILAREAL TRADE AGREEMENT

WITH USA• ANNUAL GROWTH- 6-8%• 2003 – PRIVATE SECTOR = 25% OF

ECONOMIC OUTPUT• GROWTH FROM AN EXTREMELY LOW BASE

STILL REFLECTING EFFECTS OF WARS AND SOCIALIST ECONOMY

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• THE ECONOMY• MAIN IMPORTS:

• MACHINERY, REFINED PETROLEUM, STEEL, MATERIAL FOR TEXTILE INDUSTRY, CLOTH

• IMPORTS FROM • CHINA, TAIWAN, SINGAPORE, JAPAN, SOUTH KOREA,

THAILAND & MALAYSIA

• MAIN EXPORTS: • TEXTILES & GARMENTS, FOOTWEAR, FISHERIES

PRODUCTS, ELECTRONICS

• EXPORTS TO • US, JAPAN, CHINA, AUSTRALIA, SINGAPORE, GERMANY, UK

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• THE ECONOMY• AGRICULTURE• FISHING – FISH FARMING, ESPECIALLY IN

THE SOUTH• FORESTRY• INDUSTRY: 40% OF GDP (2004), 13% OF

WORKFORCE• PETROLEUM – EXPORTING COUNTRY• SERVICES & TOURISM• INFLATION

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• THE ECONOMY• PLANNED-MARKET ECONOMY

• STILL SHIFT FROM HIGHLY-CENTRALIZED TO SOCIALIST-MARKET ORIENTATION

• ALMOST ALL ENTERPRISES ARE SMEs• GDP/CAPITA - $1218 (2010)• POTENTIALLY THE FASTEST GROWING

EMERGING ECONOMY BY 2025 (PricewaterhouseCoopers)

• VN DONG IS LOOSELY PEGGED TO THE US$

• VINASHIN

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• THE ECONOMY• UNDER- AND UNEMPLOYMENT … SOME

PICTURES

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• BUREAUCRACY & CORRUPTION• TO ATTRACT FDIs, RULING PARTY TRIES TO IMPROVE BUSINESS

ENVIRONMENT• ATTEMPT TO COMBAT CORRUPTION WHICH IS RAMPANT

THROUGHOUT• RECENTLY ABOLISHED 200 “UNNECESSARY” PERMITS• SPECIAL RELATIONSHIPS WITH AUTHORITIES & FRIENDSHIPS

ARE BECOMING LESS IMPORTANT WHEN DEALING WITH THE GOVERNMENT

• STILL, RAMPANT CORRUPTION WITH PUBLIC PROCUREMENT & CONTRACTING PROCEDURES

• LAND MANAGEMENT IS THE MOST CORRUPT SECTOR• NO INDEPENDENT ANTI-CORRUPTION AGENCY => NO

PROTECTION TO WHISTLEBLOWERS, LACK OF FAITH IN SYSTEM, …

• 2010 CORRUPTION PERCEPTION INDEX: 2.7, 116th IN THE WORLD, (TRANSPARENCY INTERNATIONAL)

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• MANAGING IN VIETNAM• IT IS ESSENTIAL TO MAINTAIN HARMONIOUS RELATIONSHIPS

& BE COGNIZANT OF THE NEED FOR PEOPLE TO RETAIN FACE IN ALL TRANSACTIONS => CAREFUL CRITICISMS

• PUBLIC CRITICISM OR DISPLAYING ANGER CAUSES A LOSS OF FACE AND MAY JEOPARDIZE FUTURE BUSINESS RELATIONSHIPS.

• BUSINESS CLIMATE IS UNDERGOING A GRADUAL TRANSFORMATION INTO MARKET-ORIENTATION …

• SOME BUSINESSPEOPLE REMAIN SUSPICIOUS OF FOREIGNERS, PERHAPS A HOLDOVER FROM THE COMMUNIST REGIME.

• GOVT IS UNDERTAKING A FORM OF PRIVATISATION, CALLED ‘EQUITIZATION” WHERE COMPANIES ARE MADE PUBLIC, WITH THE GOVT. RETAINING A 20% MINORITY STAKE => MANY NEGOTIATIONS WITH PRIVATE COMPANIES MAY ENTAIL DEALING WITH A GOVT. AGENCY + COMMUNIST PARTY OFFICIALS.

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Profile of Vietnamese Management System before the Renovation Policy

Item Characteristics

Planning term Short range (1-2 years)

Control devices (Time) punching clocks; frequent observation

Quantity control Some quality control

Authority definition Unclear; collective responsibility

Degree of decentralisation/delegation

Low

Leadership style Paternalistic - autocratic

Trust and confidence in subordinates Medium; ‘men of the system’, ‘organisation men’

Personnel policy Not stated, not transparent, regulated and standardised

Communication pattern Top-down

Training programmesMany (e.g., on-the-job training), but often not effective and relevant

Motivation Monetary and psychological

Employee morale Not always high

Absenteeism Low to medium

Productivity Low

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Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai VuongResearch and Practice in Human Resource Management, 10(2), 36-55 (2002)

• ¨People in in the north of the country are characterised as politically sensitive, hard working and risk avoiders. The northern part of Vietnam was strongly influenced by the Chinese culture due to a 1000 year period of dominance of the Chinese feudalism. In addition, Vietnam and China have been part of the socialist camp for many decades. The history and geographic vicinity meant that Vietnamese people share many of the cultural and business practices of their Chinese neighbours.

• In the words of Hofstede (1980), the Vietnamese culture can be described as high power distance, high collectivism, moderate uncertainty avoidance, and high context

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Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai VuongResearch and Practice in Human Resource Management, 10(2), 36-55 (2002)

• The high power distance characteristic is present in the daily life of Vietnamese as well as in business. In the family, sons and daughters have to obey parents’ orders.

• In organisations, there is a clear subordinate-superior relationship. Titles, status, and formality are very important in Vietnamese society.

• Collectivism has existed for a very long time in Vietnam. It is characterised by tight social frameworks and self-functioning communities. People expect ‘in groups’ to look after their members to protect them, and provide them with security in return for their loyalty.

• Vietnamese people place importance on fitting in harmoniously and avoiding losing the other’s face. In conflicts, they prefer to come out with a win-win situation.

• Vietnamese culture displays moderate uncertainty avoidance. People in society feel threatened by ambiguous situations and try to avoid these situations by providing greater job stability, establishing more formal rules, and rejecting deviant ideas and behaviour.

• One of the distinctive features in the Vietnamese society is indirect speech, resulting from the importance of saving face. In compensation, the Vietnamese have a very good sense of humour that surfaces often in every opportunity and conversation.

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Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai VuongResearch and Practice in Human Resource Management, 10(2), 36-55 (2002)

• Typically, the bureaucratic management style was most widely used in the state owned enterprises.

• The familial style ranked second showing the patriarchal influence on business in the Vietnamese traditional culture.

• The conservative, participative and authoritarian styles were also popularly used, ranking third, fourth and fifth respectively, among state owned enterprises. This reflects the characteristics of both the old traditional values and the socialist principles of today’s society.

• In the private sector, the familial style was mostly used. Most private enterprises are of small size, developed from family workshops or family stores. Members in the enterprises had a close relationship, as they were often relatives or friends of the managers. The latter preferred to build their enterprises as a big family. The bureaucratic, conservative and authoritarian styles also ranked high in this sector.

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Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai VuongResearch and Practice in Human Resource Management, 10(2), 36-55 (2002)

• LEADERSHIP STYLE• In the state owned sector, most managers tended to adopt a paternalistic approach,

by keeping close supervision over their subordinates. They often gave a great deal of direction to ensure that the work is done well. Managers in this sector were also less willing to provide freedom and delegation to their subordinates in deciding their course of actions. They seldom consulted subordinates’ opinions before making decision.

• The situation in the private sector was almost the same as in the state sector. However, the managers in this sector were inclined to pay more attention to the interest of their subordinates. At the same time, more concern seemed to be centred on the productivity of the employees/workers by exercising much closer supervision than their counterparts in other sectors.

• In the joint ventures, managers particularly favoured the participative management approach by stimulating teamwork and giving more freedom to subordinates in deciding their working schedules

• In brief, many Vietnamese managers still displayed the authoritarian and familial styles of management. However, in the transition toward a market economy, there is high interest among the younger generation of managers, pioneered by those in joint ventures, to adopt and practice a participative style of management.

VIETNAM

Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai VuongResearch and Practice in Human Resource Management, 10(2), 36-55 (2002)

VIETNAM

EASE OF … 2010 RANK OF 183 ECONOMIES

STARTING A BUSINESS 116

CONSTRUCTIONPERMIT 69

EMPLOYING WORKERS 103

REGISTERING PROPERTIES

40

GETTING CREDIT 30

PROTECTING INVESTORS 172

PAYING TAXES 147

• OTHER INDICES• HUMAN DEVELOPMENT INDEX (NOV. 2010)

• * #113 IN THE WORLD (FINLAND #16)• .572 (1.0 MAXIMUM) (FINLAND: .871)

• INCOME INEQUALITY – GINI COEFFICIENT• GINI VN = 34.4 (FINLAND: 26.9)• R/P 10% VN = 6.9 (FINLAND = 5.6) (AVERAGE OF INCOME OF

10% RICHETS OVER 10% POOREST)• R/P 20% VN = 4.9 (FINLAND = 3.8)

• DEMOCRACY INDEX• VN # 140 IN THE WORLD; 2.94 (AUTHORITARIAN)

• (FINLAND #7; 9.19 FULL DEMOCRACY) • GENDER EMPOWERMENT MEASURE

• VN #62 IN THE WORLD; .554• (FINALND #3; .902)

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• NEGOTIATIONS IN VIETNAM• LEARN A FEW WORDS AND BASIC HISTORY• VIETNAMESE ARE VERY NATIONALISTIC => AVOID SENSITIVE

TOPICS• CONNECTIONS AND INTRODUCTIONS ARE PARAMOUNT• STILL VERY TRADITIONAL APPROACH: FACE-TO-FACE, RELATION-

BASED• OUTWARD MODESTY IS IMPORTANT: IT IS NECESSARY TO DENY

COMPLIMENTS => SELF-DEPRECATING HUMOR• IT’S OK FOR MEN TO HAVE PHYSICAL CONTACTS, AND FOR WOMEN

TO WOMEN, BUT NOT ACROSS GENDERS• CORRUPTION IS RAMPANT, SO …• GIFT-GIVING IS APPRECIATED AND … EXPECTED• PATIENCE, PATIENCE, PATIENCE!• SMILE, SMILE, SMILE!• BE COMFORTABLE WITH SILENCES• DRINKING, EATING, SMOKING AND …

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