The campus at Hanoi’s University of Industry.

Samsung’s Vision in Vietnam

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On April 22, several Vietnamese leaders of Samsung as well as former Vietnamese and South Korean ambassadors came together during a workshop at Hanoi’s University of Industry to share elements of success, future opportunities, and advice from their own careers with approximately 300 students.

The guests of honor included Mr. Han Myoung Sup: President, Samsung Complex Vietnam; Mr. Ha Chan Ho: Strategic Advisor, Samsung Vietnam and Former South Korean Ambassador to Vietnam; Mr. Lee Cheol Ku, Vice President of Human Resources, Samsung Vietnam; and Mr. Phạm Tiến Vân, Former Vietnamese Ambassador to South Korea. The theme of the workshop was “Building Vision” which communicated three basic tenets to the university students:

  1. Work Hard
  2. Ask “Why”
  3. Attitude is Everything

These three points were emphasized at different times during the workshop but the guest speakers also implored the students to think and dream big and to travel outside of Vietnam. In particular, Mr. Han Myoung Sup told the audience that Vietnam is an important part of the global economy. Later, Mr. Phạm Tiến Vân reminded the students that even though resources are limited, creation (and innovation) has no limit so they should try to make a difference, i.e., become “Creation Heroes.” He pointed out that South Korea went from a war-torn economy to becoming a developed nation and economic powerhouse within several decades–and that Vietnam should follow a similar path. (During the 1960s South Korea was considered among the poorest countries in the world.) Indeed, Samsung’s $11 billion investment in high technology (and in human capital) in Vietnam will be one of the keys to developing the country further in the future.

Samsung and Vietnam

Apart from other Samsung affiliates’ investment capital, currently, Samsung Electronics’ investments in Vietnam include:

  • $2.5 billion in factories in the northern province of Bac Ninh (producing cellphones, smartphones, tablets, and vacuum cleaners);
  • $5 billion in a hi-tech assembly plant in the northern province of Thai Nguyen (in Yen Binh Industrial Park); and
  • ~$1.4 billion in plant in Ho Chi Minh City.

Furthermore, Samsung Vietnam’s research center is located in Hanoi, making Vietnam an essential part of Samsung’s global supply chain. But Samsung is also an integral part of Vietnam’s economy as its largest foreign investor; last year, Samsung products made up 18% of Vietnam’s total export turnover.

Investing in Vietnam is appealing for Samsung because its new manufacturing facilities benefit from corporate tax breaks for the first four years of operations, and then half the normal rate for the following nine years, depending on meeting certain criteria. These tax breaks plus the lower cost of labor in Vietnam (compared to China, where Samsung is shifting its manufacturing from) will allow Samsung to remain competitive against rivals such as Apple and Xiaomi. But it also means that Samsung will have to keep its Vietnamese production facilities adequately staffed (in part by events like the “Building Vision” workshop) in order to meet the global demand of its products. Today, about one out of three Samsung phones are made in Vietnam.

Working at Samsung

Samsung branded magazines were distributed to the students, which featured facts about operations, profiles of current employees (including salary information), and other relevant information that might be of interest to students and future Samsung employees, allowing for an in-depth summary of what the work culture is like.

During the Q&A portion, a student asked for advice for interviewing with Samsung. Samsung Vietnam Vice President Lee Cheol Ku had the following advice for the student:

  1. Introduce yourself in English or Korean;
  2. Promote your strengths and touch upon your weak points; and
  3. Make the case for why Samsung should hire you.

Once hired, a good attitude, positive thinking, and confidence will surely accelerate any career, but especially so at Samsung (according to representatives). (And if a candidate is not found competitive, the speakers advised to try and apply again.) Samsung representatives said that the company considers each worker to be a “genius” and provides a fair playing field for advancement if an employee does a good job. It advertised a realistically attainable monthly wage for “fresh staff” (university hires) of 9.7 million VND (approximately $450—the monthly minimum wage in Vietnam is approximately $150) at the workshop and stated that it needs high-quality people who work hard and can be promoted quickly (thereby earning the higher stated wages).

By the end of next month, Samsung is looking to fill 2,000 student positions. Already, 18,000 candidates have applied (with 1,600 applicants from the University of Industry).

Constructive Vision

Economies like South Korea’s provide a road map for how a developing country can turn itself into a global leader (the other notable example being Japan). Sony, LG, Toyota, Hyundai, and Samsung are all prime examples of innovative companies that emerged as a result of necessary investments in high technology, complementary skills, and long term choices. (And, by the way, Intel, Microsoft, and LG have all collectively invested several billions of dollars in Vietnam as well.)

In general, Vietnamese workers are quick learners when properly incentivized and they are natural entrepreneurs. Companies like Samsung are leading the way to positively impact the human resources standards in Vietnam as well as to position themselves for optimal competitive advantages. However, in the not-too-distant future, attempts at a Vietnamese “Samsung,” or a Vietnamese “Xiaomi,” or a Vietnamese “Nintendo” may emerge to challenge these established players. Vietnam is already amassing vast amounts of IT outsourcing knowledge as it continues to build its low-tech manufacturing capabilities–and now multi-nationals are training its workforce on how to assemble hi-tech components. For some Vietnamese, it may only be a matter of time before the opportunity cost to start their own company becomes too great.

In the meantime, the advice given at the workshop isn’t just suitable for students—it’s apt for anyone in business (and would be good to record and share on YouTube with other students throughout Vietnam). Trade barriers continue to fall as competition increases around the world, especially in Southeast Asia. At the end of this year ASEAN integration begins, which will bring with it zero percent tariffs for most products throughout the region by 2018. No one can say for sure what the landscape will be like then–but the best way to predict the future is by creating it. Without a doubt, Samsung will continue to play a critical role in the Vietnamese ecosystem for years to come as it continues to invest billions into the rapidly-developing country.

LED accent lights.

Vietbuild Hanoi 2015

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Today is the last day of the 2015 Vietbuild Home International Exhibition, a place to showcase new products, new technologies, and to check out new trends in the Vietnamese construction industry. The fair, held from March 25-29, is located at the Giang Vo Exhibition Center in Hanoi’s Ba Dinh district (184 Giang Vo, to be precise). More than 1,000 booths were spread over five areas to represent over 400 local, international, and joint-venture companies.

We stopped by the exhibition twice over the course of the four day event to get a feel for both the direction of the construction industry and for current customer expectations in Vietnam. At times, the exhibition felt more like a nightclub with the loud Vinahouse music playing as well as the “PG” (promotions girls).  Some of the larger and more popular booths were set up by companies like Eurowindow, Viglacera, and Austdoor. In addition to products, several real estate developments were on display such as V-Green City Pho Noi and Cam An – Hoi An. Furthermore, there were some crowded safety booths, which is good considering the generally lax attitude toward safety on many construction sites; we’re glad to see that safety considerations are becoming a higher priority.

Overall, there was a strong showing of reputable foreign products such as Stanley Tools and DeWalt; as well as products from South Korea, Germany, China, and others at the fair. For smart home options, there were several companies, including brands from Portugal and the Czech Republic. However, there were also a portion of products that would have a hard time finding traction in the west. Eastern and western tastes can be very different, i.e., what is considered “good design,” “fashionable,” or “stylish” in one part of the world would be seen as falling flat in another. Vietnamese (and Asian, to an extent) preferences, in general, tend to gravitate toward ornate, flashy, or imposing furniture, art, and, design (or frugality for items that very few people will see). For example, we witnessed plenty of oversized wooden furniture at the exhibition, as well as showers with multi-colored and changing LED lighting installed in the unit itself; a “karaoke shower,” if you will.

As we continued to walk around, at one point we caught a glimpse of 18th century aristocracy via a local company’s booth representing the Renaissance brand. The closest product to the other side of the spectrum was a “futuristic” nano spray which could render an item waterproof if appropriately applied—product demonstrators were using hair dryers, light bulbs, and other appliances that had been coated with the spray under water in a fish tank. According to the salesman, a can sells for approximately $50 and a coating will last between one and three years. While certainly a useful technology, the spray has the high potential to be misapplied, misunderstood, or misused–especially when using electrical products under water.

One section that caught our eye was the CNC machining and laser engraving area where small Buddha statues and other traditional-looking pieces of art were being crafted in front of us. It was interesting to see the numerous companies that are operating in this space, and even more curious that they were choosing to (re)produce traditional art pieces instead of contemporary ones. Tourists beware: that “old wood carving” (you’ll buy thinking that an old grandfather in a remote village somewhere spent years carving) could have actually been made by a computer-controlled machine the day before.

Vietnamese Homes and Expectations

The basic shape of Vietnamese homes (also known as “tube houses”) is credited to older tax codes resulting in the standard shape of ~3 stories tall by 5 meters by 13 meters deep (15ft wide, 40ft long). Many Vietnamese homes have a retail business (with fewer numbers having a business office) on the ground floor. Some newer houses can still use these dimensions as an archetype, but for those who can afford it, bigger is always better—especially in Asia.

Still, space is at a premium, especially with two, three, or more generations under the same roof (traditional Vietnamese children don’t move out until they marry and the eldest child must care for his/her parents). Additionally, taste, like art, is highly subjective; what looks or sounds “good” to one person may not to another. However, if you want to sell in a particular market then you need to understand the local culture and sell things the local consumers want. At the same time, you can also risk damaging or diluting your brand image just to make a quick sale. Thus, educating consumers about your product or service—and continuing to drive a consistent message—is the best way to establish your brand as a market leader in the long term. However, it can and will be capital and time intensive.

For example, new homeowners don’t care that the unit they are being handed over is dirty (e.g., paint spots on the floor and all over the baseboard), has shoddy installation (e.g., door trim not flush with the walls), and generally represents poor craftsmanship (e.g., gaps, crooked lights, and cheap materials). Why? Because once they take possession of the unit, they invest additional millions or billions (VND) to renovate the (sometimes) brand new unit.

(And why should trade workers and their managers care if clients don’t demand higher standards? These low standards only work as long as the requirements are low—they definitely aren’t suitable for smart homes.)

In apartment buildings, this renovation can mean that even the original front door is replaced with some drab steel cover and, of course, bars are added to the windows for security purposes. However, this isn’t the norm in much more expensive serviced residences. Yet, when we visited Lotte Center Hanoi last year about a month before it opened, the most technologically advanced equipment in a serviced unit was a motion sensor near the front door to turn a single light on/off upon entering/exiting. We covered the opportunity in this space in last week’s post.

Last week, we went to a brand new apartment to check out a recently finished two bedroom unit in the center of Hanoi; overall, the space was poorly utilized. For example, the “master” bedroom had a tiny balcony but no bathroom. The other bedroom had its own bathroom but there was a two square meter hole in the wall (near the ceiling) leading outside. The original door on the unit was for a flimsy deck door so there was little privacy. The other residents on that floor had all replaced their doors with a heavy wood door with a gray metal security gate to cover it (from different vendors). And, of course, security bars could be seen in front of the windows—an after market addition. Ultimately, it was hard to tell whether it was a hallway in a new apartment building or in a new prison.

Current and New Opportunities

Home security remains a huge opportunity in the Vietnamese market. As mentioned, Vietnamese homes usually have barred windows as well as shudders. There is at least one heavy-duty gate on the front door and if there is another then it’s a different style (metal gate or metal roller). Any walls might have barbed wire or broken glass perched on top and some deck spaces will be fully enclosed with metal bars. This security conscious approach to their homes is partly the result of a cash-bashed society, but it’s also because Vietnamese consumers tend to follow the pack: “if my neighbor does it, then I must also do it or do it even better.” Think of it like a hyper “Keeping up with the Jones’” mentality.

Companies like Dropcam provide the perfect option for Vietnamese consumers, who can check up on their homes while they are away or can be alerted when there is unauthorized movement. Beyond security, other smart home products could be successful in Vietnam as well including Philips Hue and the Sonos line up. But how can consumers want something they don’t know about?

Events like Vietbuild remain a great opportunity for demonstrating products—and in markets like Vietnam’s where educating consumers about a nascent industry is required, there is no substitute for seeing how a product works (instead of hearing about it). This is a country where the majority of e-commerce payments are handled COD once a consumer has had the ability to check out the product in front of his/her house before paying the delivery driver. Seeing is believing when it comes to new technology, and especially in Vietnam where consumers are suspicious about product quality as it still has room for improvement.

The next Vietbuild expo will be held in Danang from April 22-April 26.

Vietnam Today

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Vietnam means different things to different people—some of these perceptions change every day, every year, or every visit and some of them remain frozen in time.

Tradition. An untapped opportunity. A glorious past. Increasing competition. The Fatherland. Independence. Echoes of war. A bright future. A rising dragon. The party. People of the sea. Resilience. Freedom. Children of the mountains. Liberalization. Home. Happiness.

So, what is Vietnam today? This post attempts to encapsulate daily life in Vietnam as a snapshot of some of the most common sights, sounds, and experiences in the country today. Some items on this list are not exclusive to Vietnam (or even Asia) but they are still noticeable in daily life in a major city like Ho Chi Minh City or Hanoi.

Vietnam is the land of…

1. “Selfies”

If you go out one night in either Hanoi or Ho Chi Minh City, you’ll probably find people taking selfies or self-captured photos. There are certain requirements for where and when one should take a selfie, including being with a significant other, before eating, being with friends, and generally anywhere and everywhere in between. The ubiquity of smart phones in Vietnam allows for the endless flow of media experiences to be captured, shared, and commented on to form an constant feedback loop.

2. Cafes

The cafe is an important part of life for Vietnamese. They are used for a bunch of core activities including meetings, relaxing, literally sitting around, playing games (multiplayer and single player), and to communicate status. Some common drinks are cafe sua da (also known as cafe no da in the north), xinh to xoai, and tra da. The cafe culture here is strong, rich, and all-encompassing but still very different in parts of the country.

3. iPhones

Not just smartphones, but Apple iPhones. These devices are seemingly everywhere and can be seen used by celebrities as well as (some) shopkeepers and street vendors. One way that the number of iOS devices increase in the country is through family: as people upgrade their handsets to the latest models, they pass on their older models to family members. There are millions of iOS devices in Vietnam but the app marketplace is largely fragmented with third party app portals.

4.Honking

A sea of traffic, clouds of exhaust, and incessant honking. Many Vietnamese drivers seem to use the horn simply because it is there. Another large portion seem to use the horn as if were sonar by sending out “pings.” The horns here seem to be at least 30% louder than US models and we could see custom horns emerge here similar to how there are custom ringtones for phones.

5. Wi-Fi

There is no need to ask if a venue has WiFi since it’s more efficient to ask what the password is (usually 12345678 or some similar variation). Almost every cafe or restaurant provides free Wi-Fi (that works when an undersea cable isn’t damaged). The widespread availability of Wi-Fi could pose a cyber security risk in the future, especially if the lax attitude toward privacy continues here.

6. Motorbikes

Vietnam is the world’s fourth largest market for motorbikes. During rush hour, motorbikes form rivers, which larger vehicles attempt to ford or cut through with impatience. Trying to navigate an intersection with other motorbikes is probably akin to being in a mechanized phalanx. Companies like Yamaha Motors Vietnam need to position themselves carefully considering that the Vietnamese dream is to drive to work in a car.

7. New construction

Drive around Hanoi and you can hear and see the future of Vietnam. Fly into Ho Chi Minh City and you can see the cranes that dot the city from above. Some future projects will be added to an already large real estate inventory (with outrageous prices per square meter) while smarter developers will find ways to differentiate their projects via advanced automation, control, and integration technologies in buildings to benefit end-users (and ultimately, to increase ROI).

8. Recycling

“Reduce, Reuse, Recycle” here is “Resell, Reuse, Repurpose.” Empty water bottles are collected and sold to recyclers. Anything that is not completely broken or destroyed is used or repurposed until it falls apart. It’s one of the most efficient aspects of Vietnam—especially when contrasted to some western habits of instantly replacing or upgrading appliances.

9. Name Brands

Nouveau riche are rising in status and increasing in numbers. Of course they are flocking to luxury brands but some lack the sophistication that usually comes with style. As they say, “money doesn’t buy class” so there is opportunity for etiquette schooling and training, especially in the north.

10. Youth

Young people are everywhere and although there are far too many banking and finance majors, they are the future of Vietnam (as cliched as it may be). A segment of them are break dancing, popping, locking, and dropping their ways into adulthood while those studying STEM subjects seem to be diving headlong into startups and IT outsourcing. Right now, many young Vietnamese idolize KPOP stars and are hungry for American culture—but they will all eventually craft their own styles.

11. Touch

Personal space does not exist here. Touching, at times inappropriately (from western point of view), is a way to communicate (since much of Vietnamese language relies on context). Couples (not just romantic ones) can be seen walking together in a semi-drunken stagger while talking loudly, laughing, or sharing some inside joke.  Be prepared to “pinball” off some people in crowded public spaces as space is at a premium. Co-workers regularly and playfully slap each other; a sign of affection.

12. Drinking

Drinking and Vietnam go hand-in-hand. Beer Hanoi, Beer Saigon, Beer Truc Bach (the finest beer in Vietnam), Beer Halong, Beer Hue—you get the idea (those are all beer brands, by the way). Then there is ruou, rice alcohol which can come in a variety of flavors. Drinking is an occasion for bonding, building soft relationships with counterparts, and for social (and professional) lubrication.

13. Smoking

Cigarettes, traditional bongs, and hookah. Non-smokers are in for a rough time in Vietnam—there’s always someone smoking nearby (usually Marlboro or Thanh Long brands). Smoking is allowed indoors and is encouraged in nightlife spaces. The air quality already is not great in major cities like Ho Chi Minh City and Hanoi—the longterm health implications of these combinations are alarming. Purchases and installations of air and water filtration systems will become more common as Vietnamese seek to protect their children from harmful exposure to pollutants.

14. Music

Music is used to attract customers on the street, to drown out one’s senses in nightclubs, and just because someone is in the mood to blast it. Young people on the street break out into impromptu ballads or sing along with songs in unison. Overall, music here is dangerously loud and Vietnamese will pay the price for these unsafe audio levels in the form of fees to audiologists.

15. Stares

Everyone stares here, especially if you are an attractive woman, a foreigner, or are different in any way, shape, or form—in that case then they stare at you as if you are an alien. A simple smile or wave can break the ice but coming from a culture where staring is considered impolite, it can be jarring to some.

20 Years (+/-)

Twenty years ago this list would have been radically different except for a few items. Most vehicles on the roads were bicycles at that time. Imagine what a snapshot of Vietnam will be in the year 2035 with approximately 110 million people. Unrecognizable? Some parts Bangkok and other parts Hong Kong? Sustainable eco-tourism? A center for innovation in Southeast Asia?

In the early 20th century, the population of Vietnam was about 20 million. Today, Vietnam has over 90 million people. Vietnam is rapidly changing; some changes are positive and while others are unclear. What will be Vietnam’s role as we continue deeper into the 21st century? Only time will tell but one thing is certain—the pace of change here will surely increase.

Long Van Group

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Long Van Group, founded in 1992, is comprised of four companies: Long Van NTV, Loval, ALV, and Hondalex. Through its portfolio companies based in Vietnam and the US, the family-owned group is perhaps best known for its aluminum product manufacturing—which is how it got its start. The other companies include a trading company in Ho Chi Minh City for the domestic market, a trading company in the US for the international market, and a joint-venture with Hondalex. Recently, we sat down with Thy Van Nguyen (Vanessa), whose official title is Operational Director but she is heavily involved with the strategic vision of the group as well as integral in implementing organizational change across the companies.

Ms. Nguyen was born in Ho Chi Minh City and moved to the US when she was 16. After being based in Seattle, Washington and attending university in the US, Ms. Nguyen moved back to Ho Chi Minh City about 18 months ago in order to focus on the family business. She currently spends about 80% of her time in Vietnam between Ho Chi Minh City and Binh Duong Province, where the manufacturing  activities of Long Van Group takes place. Currently, one of Ms. Nguyen’s major initiatives is the transformation of culture in her organization, something that she has successfully done in the domestic trading arm of the group.

Changing a Culture From Within

Ms. Nguyen is a big believer in getting the people doing a task or activity to understand the purpose of it. The people on the front lines are already the best people to do to the job so they will also be in the best position to improve the process. It’s only a matter of getting them used to speaking up and contributing regularly for the reward is improved efficiency and recognition by management and their peers.

That goal is sometimes easier said than done as older managers in a company have a more traditional mindset of top-down management style. Therefore, it’s necessary to first change the managers—either their attitudes or outright replace them (however, Ms. Nguyen didn’t have to fire anybody). If the managers had not bought into her vision at the onset then the project couldn’t have worked. Having the managers on board enabled the culture at the trading company to completely change within eight months but it took six months before she began to see the fruits of her labor. It also helped that Ms. Nguyen speaks Vietnamese in addition to English, and is the daughter of the company’s owner so she did have the power to initiate and implement change. However, despite these advantages it was still tricky for her to balance the right relationship with the workers due to some strong local cultural elements.

Part of the culture in Vietnam revolves around a fear of power which has roots in the royal history of Vietnam and continues in the form of wealth and political power today. Therefore, people in positions of power might need to be more informal, more cheery, and re-emphasize what resources are available to workers who need help, guidance, or any kind of assistance. People aren’t going to ask for help on their own or tell you what problems they have. Vietnamese culture is generally not expressive; a Vietnamese son or daughter can do 1,000 things right and not receive a single compliment. However, if s/he does one thing wrong then they will hear about it to no end. Thus, a lack of a negative response is a positive step. It’s important to praise workers because no one really says compliments from an authority position so it really impacts their subordinates.

It’s interesting to note that Ms. Nguyen was able to effectively change the culture because of gaps in old culture when other senior leaders were focusing on other business lines. Her changes came at the right time because the old system was not effective for expanding beyond the original 20-30 employees since it was largely based on gut feelings.

It may also be that everybody can see the problem at hand but no one wants to do much about it–Ms. Nguyen sought to change that. The interesting thing is that the workers want to hear different perspectives but not necessarily change the old ways of doing things. So even though everyone can point out the problem, no one can suggest a solution because it may be too risky to suggest a potential solution.

This challenge of self-confidence and expression has its origins in the educations system in Vietnam. The educational culture in Vietnam revolves around being told what to do; the teacher tells you the answer and that’s the answer–end of discussion. One way to overcome this element is by tapping into the fact that Vietnamese people love to look good; they want the story to be about them. They love the credit so give them that credit when appropriate. For example, present them with a situation and ask them to help. Then you can follow up with: “I listened to you and it worked.” In these moments you will see how proud the workers are and have just established a precedent. Perhaps the most effective way to connect with workers is to tell them stories, and then get them to be part of the stories. It can be as simple as presenting a scenario to workers and asking them, “if you had to make that decision then what would you do?” Indeed, not all changes are smooth and changing a culture is perhaps one of the toughest tasks to take on but by empowering workers it increases an organization’s operational efficiency overall.

Make no mistake: an organizational transformation is not without friction and conflict—especially when dealing with the “old guard.” Some people quit in the process, in part due to wanting to change the organization in a different way than Ms. Nguyen so they left. Changing the culture required that Ms. Nguyen trust that a real foundation was in place for the company to expand upon itself. To that end, she had to let go of some of the intensive focus she had on certain processes. These days Ms. Nguyen’s 62 workers at the trading company embrace and drive towards her and their vision of change.

Training and Developing Vietnamese Workers

Improvement is a continuous process at Long Van Group. Ms. Nguyen gives training courses once or twice a week for each division in her company in an effort to better prepare them for current and future work-related tasks. She strives to get different workers to select a unit each week based on a set list and give a presentation to the other workers. In her “guide-on-the-side” role, she asks questions and draws opinions from the workers and gives feedback at the end of each session.

During her training sessions, she will also share a story about a work experience, or conduct a workshop, or present a scenario. Then the workers will split into groups and talk about what each worker would have done in the scenario or what to do in the situation in the future.

Example: Your colleague sends an email to an organizational partner who you must coordinate with on a project. In the email, your colleague states that your company is not responsible for a specific portion of scope but that there are related issues that need to be addressed for the client’s benefit. The organizational partner’s vice director simply responds: “If the scope is not your responsibility, then your opinion does not matter.”

Ms. Nguyen will then question the workers on whether or not the logic of the vice director is wrong. Thus, the workers are solving problems with real experiences (the above example is actually used in training by Ms. Nguyen and was experienced by your author in Ho Chi Minh City last year) and are thinking about how to view situations more deeply.

This analysis is important because when responding to allegations some Vietnamese tend to lash out when things start to take a dive and they can take things personally even if they aren’t meant to be from your side. So it’s vital to be mindful of not only what you say (although that is important as well), but about how they feel (and taking care to let everyone save face).

Within Vietnam, southerners rely more on gut feelings whereas northerners are more logical. The southerners present themselves at face value; they want to prove to you that they care about you when they meet you. However, northerners want to compare status levels and act accordingly. Thus, foreigners might have a better time in Hanoi compared to “common people.” Northerners tend to think more before they talk so their use of words is better and more structured which presents them as being clever. Southerners speak more from the heart since they are generally more open and expressive. It’s important to be aware of your counterpart’s feelings because in Vietnam and in life, one can never do something big or grand without building a coalition.

Human Capital in the US and in Vietnam

In the US, people and workers are proactive while in Vietnam they are largely reactive. However, foreigners can learn a lot from Vietnamese people. But first, they must stop assuming and see things in limited possibilities. Ridiculous and downright crazy (from a western perspective) things could and will be possible because it may be the only option for moving forward in Vietnam.

The social structure is more set in the US due to the developed economy and Puritan work ethic. So in the US there is freedom to choose within set choices, i.e., the illusion of freedom because everything is already structured. Life is very predictable in the US so many people want to be proactive, they want to be ahead of the curve. Thus, Americans tend to assume a lot when planning.

On the other hand, Vietnamese are “proactive by being reactive:” they expect the plans to go awry so they bypass the planning stage and when things devolve they are better equipped to salvage the situation. Thus, Vietnamese prepare for certain situations but not for all situations. In that sense, they are able to make unreasonable (or even crazy) positions seem logical because they have developed these skills. They are very adept at framing an arena and taking up defensive and offensive positions and excel when things don’t go right, in part due to the messy social structure. It may be surprising to some that Vietnamese can be very practical because oftentimes there are no other options.

So, Vietnamese are really good at changing situation into their favor but they are also good at making crazy logic sound normal. Some people may believe that if they spot an issue and bring it up, then they will need take responsibility for it. People are afraid of responsibility because of the challenge of getting the task accomplished correctly. Vietnamese people like to look good so they don’t like to put their name on a project or idea in case it fails. But if it turns out good and then they take full credit. For Ms. Nguyen, a large part of the effort to change the organization is by marketing herself through self-branding because the perceptions of the workers will make or break any initiative.

Opportunities for Expats

To Ms. Nguyen, Vietnam is the perfect country to grow something big—but it’s a double-edged sword. Everything is based on relationships, which can be good or bad depending on the perspective. To be successful in Vietnam, one needs to be flexible and open-minded since many problems in Vietnam need to be solved in unorthodox manners. Structure beyond social doesn’t really exist, so if one relies on structure to move forward then s/he is in for a rude awakening (unless those connections are present). Above all, give Vietnam a chance but know where your limits are and what is the extent of your comfort zone for (operational and legal risks).

Expats shouldn’t assume anything in Vietnam and they will have to take on more responsibility to ensure that things stay on track and don’t fall apart. Things that are taken for granted in the west simply don’t exist in Vietnam. For example, the search results of Google, and Google VN are very different. Some people in Vietnam trust the US version more than the Vietnamese version. Also, Vietnamese websites generally don’t have a “how-to” section. For western websites, the product or service offered is described in depth and it is very clearly shown what it is and how it is done.

When explaining something in Vietnam, it has to be simple, clear, and consistently explained multiple times. Then, inverse questions need to be asked in order to triangulate what the actual response is for determining if the receiver understands or not. Communicating processes, requirements, or issues to locals can be timely and frustrating, even when explaining in the Vietnamese language. One way to get Vietnamese people to understand a process or information is through infographics—and in particular, youngsters will understand it better. They like the convenience aspect and the way the information is presented so they are more likely to understand it. If a member of the older generation doesn’t understand something, then s/he will just ask someone nearby or a close friend who will be put on the spot and could just blurt out something that sounds good but isn’t necessarily accurate. Thus, a crazy feedback loop begins where most of the information is wrong as the process continues. Besides, many Vietnamese don’t believe what they read. The older generations do, but the younger (those born in the 1990s and later) ones, no. Cute infographics can help explain things succinctly—and the cuter, the better; think anime characters.

In more general terms, most work fields don’t give newcomers to the country a chance. Connections are part of status which bypasses merit in many cases. It doesn’t matter if you are the best in your field, if you don’t have a good connection then no one will work with you. When arriving in Vietnam, get the connection first. Leverage being sent by a foreign company by learning about the country and forming bonds. Another option is to wait until you have the money to buy status here. In that sense, you don’t have to be the best person in your field—you can be average but still get a piece of the action through connections.

Drinking: Bad or Good for Business?

Still, business can be too much relationship-based; that is to say too reliant on gut feelings and feelings in general. Logic is largely used to make decisions in the US but in Vietnam they need to “feel it” in order to do something. These positive feelings are usually the result of some bonding over alcohol, either bia hoi, ruou, or some imported spirits.

Ms. Nguyen points out that her male employees never get drunk enough to be inappropriate at company functions. And for those who don’t drink any alcohol, while they can sponsor a “drinking nominee,” they could be at a disadvantage with their local counterparts by them not “truly” knowing the person when s/he is drunk. Thus, the best way to establish trust with Vietnamese counterparts is to drink alcohol with them—so if you get drunk easily then you must learn how to control yourself. Vietnamese truly believe that you will be yourself when you are drunk so in a way it’s like peering into your soul.

Everything you say or do shapes their perception about you, especially when drinking. The actual message, while important, is secondary since they are judging you via a gut feeling. It can be quite dangerous since Vietnamese may perceive an offense where there was none. When doing business, Vietnamese generally won’t trust you until you drink alcohol with them and they are able to see the “true you.”

How you are as a person when drunk may be the biggest indicator of doing a deal with Vietnamese. Their perception of you while imbibing will be the baseline for judging you. Once they see you drunk, then that’s how they will perceive you and they will hold onto this image of you until the next time you drink together. If you are a bad drunk, then beware.

The Next Step

Next up for Ms. Nguyen is changing the culture at the factory since it is a special case. The entire production was in the hands of two directors but the current result didn’t turn out so well so the focus is on getting workers to take more initiative and overcome fears of failure. Indeed, Long Van Group is at the forefront of providing high-quality products and driving organizational change in order to provide a better customer experience. Vietnam is becoming an even more prominent destination for outsourcing and manufacturing and as more projects are implemented here then the technical and management skills requirements will increase as well.

Today, China produces for much of the world but in recent years some factories have migrated to Vietnam, in part due to the fact that wages in China are higher than in Vietnam. However, prices of finished goods in Vietnam can be higher than in China because of other operational costs. The disadvantage that Vietnam has is that the workforce is less skilled than China’s and the economies of scale don’t exist on par with China. Quality control remains an issue in Vietnam as well.

As more foreign companies come to the Vietnamese market, the standards for local workers’ qualifications and skills will rise. A growing trend is for Vietnamese workers to take courses at private institutes to aid in their professional development, e.g., how to be a better manager or CEO. These courses are truly development on an individual level because people are there because they want to be better. For the students, Ms. Nguyen suggests that they seek to understand on a conceptual level and learn to connect everything.

“Learning how to connect things is the tool you need to work in the real world,” Ms. Nguyen advises.

Below, Ms. Nguyen shares some of her favorite quotes:

“Do or do not, there is no try.” –Master Yoda

“If you are a good leader, when your work is done, your aim fulfilled, your people will say, ‘We did this ourselves.’” –Abraham Lincoln

“You can listen like a blank wall or like a splendid auditorium where every sound comes back fuller and richer.” – Alice Duer Mill

 

Special thanks to Vanessa Nguyen of Long Van Group who shared her time with us and greatly contributed to this week’s post.

On the road north of Vientiane.

Vientiane, Lao PDR

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In the 1960s Vientiane had the reputation of being the wildest city in Asia. Today, Laos–with Vientiane as its “sleepy” capital–is known as one of the most underdeveloped countries in the world. Usually, people know one of two facts about Laos: that it is land-locked or that it is the most heavily-bombed country, per-capita, in the world as a result of being a battleground for 20th century ideology. However, these quick facts don’t do the beautiful country and its warm and friendly people justice–and this basic knowledge barely scratches the surface of the complex history of Southeast Asia.

Laos shares a linked history with Vietnam but this relationship was further strengthened during French colonial times, and continued through the Second Indochina War. Even today, there are strong and deep ties between the two countries; for example, earlier this year Vietnam funded an upgrade to the Kaysone Phomvihane museum in Vientiane.

Similar to Vietnam, Lao PDR began to open its economy to the world in 1986 but maintained strict controls on its political apparatus. Despite the current political and economical situation, there is foreign investment here; a significant portion of new construction projects are implemented by either Vietnamese or Chinese companies depending on the size of the project. For existing construction, the electrical wiring indoors, while exposed, is run neatly, and the wiring in the streets are bundled together in an orderly fashion. In homes, switches and outlets are grouped together in junction boxes that are dispersed at chest level in various rooms. Anecdotally, the power might go out for a few hours once a month in the capital.

The most visible element of consumption by the upper class, luxury vehicles, are somewhat common throughout the capital and there are some nicely designed houses in a westernized sort of style dotted throughout Vientiane. The Toyota Hilux is the unofficial vehicle of Laos as it is ubiquitous throughout the capital. Furthermore, a significant number of vehicles are modified from their stock origins in some way–be it hood scoops, snake eyes, or chrome accents–so there is a growing tuner culture in Vientiane.

Unfortunately, rush hour traffic fills up portions of the city quickly and traffic jams can occur for no apparent reason, e.g., lack of a traffic collision or police checkpoint. When there isn’t heavy traffic, whirring diesel engines and turbo-chargers spooling up in SUVs are common sounds (and the drivers love to careen down roads meant to be driven on no higher than 30 or 40 KPH). Mercedes-Benz, Porsche, and other luxury vehicle brands have dealer presences in the capital; considering Lao PDR’s economic rankings, it can be surprising to see the Mercedes SLS in a showroom—and even more surprising to see it on the roads of Vientiane.

Vientiane Through Foreign and Local Eyes

Chiang Mai, Thailand and Vientiane, Lao PDR are two cities that are similar despite being in different countries; in terms of population, consumer preferences, and lifestyles they are very much aligned. Additionally, there is a strong Thai influence in regards to fashion, youth culture, news, and entertainment in Laos. The Lao PDR capital is literally across the river from northern Thailand, after all.

Even though many Thailand-based expats (farong in Thai) travel to Vientiane for visa-runs, it’s surprising that there isn’t a larger presence of foreign freelancers in Vientiane and in Laos in general. From a visa perspective, it can seem quite attractive for remote workers and there exists the support for foreign freelancers in Vientiane in the form of Toh Lao co-working space. For foreign full-time professionals, the options range from EMC to Sciaroni and Associates to DFDL (the last organization having been founded in Lao PDR). Of course, there are also some foreign banks such as VietinBank and Sacombank (Vietnamese banks) that have branches in Vientiane and there are also many foreign restaurants in the capital to represent small expat-operated businesses—Istanbul Restaurant, Soul Kitchen, and Jamil Zahid to name a few.

Many Non-Governmental Organizations (NGOs) have a large presence in Vientiane as well so there are expat support staff who regularly work with their local counterparts. In general, locals and foreigners who might meet and develop a romantic interest in each other can’t live together and sexual relations between them are forbidden–but marriage is always an option for those who find their soul mates in Lao PDR. A good way to meet people in the Vientiane business community is via weekly events such as the meetups put on by AmChamLao. In addition to the robust expat house party scene, there are the famous get-togethers at CCC bar in downtown Vientiane. Overall, Vientiane is a small place—there is a sense of a village mentality so reputation is important since “everyone knows everyone” in both the local and expat communities.

Outside of Vientiane and into the Countryside

The youth of Lao PDR’s high-society (Hi-So) in Vientiane can be found at Mark2 or Marina wearing trendy and/or revealing clothes and dancing the night away to western style arena house music from Thursday through Saturday nights. “After hours” almost always includes karaoke in some interesting but comfortable places for all sexes (since the culture is inclusive). Yet, these experiences are so far removed from the daily lives of the average Laotian.

Outside of Vientiane things quickly become poor besides a few cities like Luang Prabang, Pakse, and Suvannahkhet. Think unpaved roads, wooden huts, shoeless children, etc. However, throughout Lao PDR there exists a deeply respectful and hospitable culture with a strong beer drinking tradition; Lao people are perhaps the most laid back in Southeast Asia. The quintessential Lao experience is singing karaoke on a nearby river or body of water while drinking Beerlao. Social gatherings are important and women and men are not always separated at these events where people are sometimes sitting on the floor and are sharing food with one another. One unique aspect of Lao culture is the use of a single glass to drink beer in addition to a personal glass, which is passed around and shared among all the guests at an special event.

Other activities that Laotians enjoy include fishing, football (there already is a healthy representation of the up-to-date Germany World Cup jerseys), and petanque. Petanque in Laos is different than petanque in France (where it originated) and government ministries usually have a petanque court on site. Half the government ministries have their signs in French, and the other half in English (besides Lao)–the same goes for the road names in Vientiane.

The three most visible brands throughout Laos are Beeline, a telecommunications company; Beerlao, a product of Lao Brewing Company—a joint-venture between Carlsberg and Lao PDR; and Johnnie Walker, which is also popular in Thailand. Beerlao is on every restaurant sign as well as restaurant equipment such as standees and cash register desks—the result is a very large market share of beer consumption in Lao PDR.

A Future Focus

Officially, the Lao PDR government actively seeks investments in agriculture, hydropower, manufacturing, and tourism, according to its investment brochure. Organically, Laos experienced its first Startup Weekend ever in Vientiane in May of this year. Last week, Nana Souannavong, president of Snap International, and co-founder of Toh Lao co-working space, was gracious enough to explain to us the state of the startup ecosystem in Vientiane.

As Nana sees it, the biggest challenge ahead of the Vientiane startup community is getting people to understand what a startup is and getting people to be more entrepreneurial because they like the stability of public sector jobs. She shared with us that a generally strong curiosity among participants and a higher proportion of female entrepreneurs are the biggest strengths of the startup community in Vientiane. Those (aspiring) entrepreneurs who are passionate are the hardcore ones who stick through the multi-day events such as Startup Weekend–and they will be the ones to get the most out of the events. It gave her hope to see so many people show up to the first Startup Weekend because if no one showed up then she knew that the community wouldn’t be ready for another five years–the fact that people showed up was a huge victory for the Vientiane startup community. Nana also revealed that the winners of the May event are still working on the concept but as a side project since the team members already had a full-time focus before winning at the Startup Weekend.

While the official Lao PDR Small and Medium Enterprises (SME) office also supports startups, there will be many challenges on the way to creating and building a suitable environment for venture capital (VC) firms and angel investors to operate in—something does not exist although there are other forms of external investments. However, the legal framework does exist for foreign investors and founders in regards to equity but only outside of the retail industry. Nana’s advice to future entrepreneurs is to “think through what you are trying to do to understand the consequences.” Along those lines, her favorite quote is “life is an investment.” She should know since her company provides financial advice in money markets for local and foreign companies.

Startup Vientiane

At the Startup Weekend, there was a mix of tech and non-tech products and services being pitched but going forward there are no obvious areas for startups to form around. Y Combinator, perhaps the most prestigious startup accelerator, has a Request for Startups (RFS) feature on its website. While the list below is not a request for startups in the strictest sense, it does provide an external view on the opportunities in Vientiane and beyond after speaking to locals and longterm residents.

Opportunities for Startups:

-Targeting tourism (perhaps first via Triip.me and then expanding on original concepts specifically for Lao PDR)

-Creating accounting controls (perhaps in the form of mobile applications) for local and/or foreign SME in Lao PDR

-Products and/or services for the many NGOs in Lao PDR, e.g., tools to train local staff or tapping into external crowd funding

-Leveraging the growing consumer communities (for example, the car tuner culture) and collecting data points on them

-Helping expats to adjust to Laos by finding housing, goods, or services more easily (a better English->Lao dictionary, for example)

Perhaps when people think of Lao PDR in the future, a third fact might enter their consciousness: a growing startup hub centered around Vientiane. The people in Lao PDR have many things to offer the world–foremost among them is their hospitality and resilient attitude–this much is apparent upon crossing the border into Lao PDR. Another Startup Weekend is scheduled for later this year at Toh Lao co-working space–hopefully, the organizers will be able to build off the success of the last event and the participants will take even bigger risks to share their ideas with the community. It will be a long road indeed, but with community leaders like Nana, anything is possible.

 

Why waste time trying to figure out which is the correct wire when you can just run a new one?

Vietnamese Work Culture

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If you are coming to work in Vietnam from the west then it might take some time to get used to the Vietnamese way of doing things, which can be effective in its own way (it works here after all) but can also be off-putting to some people and bewildering to others. The work culture here is a mixture of indirect communication, posturing, a heavy top-down management style, and (for some workers) a “good enough” mentality when it comes to performance. Needless to say, it can be challenging to communicate your vision for how something should be done based on a client’s or your requirements.

Vietnamese workers have different professional needs than workers in the west—both in the office and on site so you might have to employ different communication techniques and different ways to motivate them in order leverage their strengths once you begin to understand how to effectively communicate with local workers. If an option, starting a new worker on a smaller project and then gradually expanding his/her scope is a good way to build his/her confidence while minimizing organizational risk. Whatever it is that you expect of a worker here, you should be able to simplify the process as much as possible or should have even attempted the process yourself beforehand to know what the pitfalls are for workers. Perceptions of good design, aesthetics, and fashion are very different here from the west—explore these arts with an open mind but be aware of the limitations in terms of technology, skill level, and approved content.

Vietnamese are generally not geared toward being creative (in part, due to the educational system of learning and for fear of losing face) when it comes to work tasks so they can experience some trouble coming up with new ways to improve processes or in creative fields such as design. Being creative may simply be too risky for them since it requires thinking about concepts, products, services, etc. in a way that hasn’t been thought of before—and it lessens the chance of success since no one has done it that new way before. Similarly, for Vietnamese workers to imagine something being done a new way via your explanation might be hard for them. Therefore, Vietnamese workers seem to fall back on “tried-and-true” ways to solve problems—which doesn’t always scale well and may be counterproductive in some cases if a step in the process has to be redone due to different (international) requirements.

However, Vietnamese are generally good at copying things, i.e., if you show them exactly how you want something done in terms of a process and the finished result then that will increase the chances of your satisfaction for the product or task end result. This method can be helpful in batch manufacturing or for installations in construction. Vietnamese workers are also able to skillfully digitally recreate and combine graphic art as a base for future modification for whatever project you might be working on but they will require guidance and input from you. (Note: If you are hiring locals then they might leave to form their own company once you train them. There’s no way you can compete with them on wages because they will have a much lower cost of living than you do.)

Coming from the west, you might notice a lot of inefficiencies in your first week or month or year in your local organization but it would be wise to refrain from actively trying to change things until you’ve proven yourself to your local colleagues and built up some goodwill. A possible first step in the right direction might be to push upper management for the dismissal of underperforming teammates especially if it’s necessary to shape a better organizational culture/fit ( however, it can be hard to fire workers due to labor laws and/or relationships).

Managing Vietnamese Workers

If you are a manager in a Vietnamese company, then try to get to know your direct reporting team as much as possible. Go to café outings as a team (the male coworkers will probably be willing to go for beers but the female coworkers generally won’t) and participate in other semi-professional bonding experiences. As long as your team performs to an acceptable level (to those you report to), and your client or manager is happy then there really isn’t a need to change much except for the professional growth of your team.

At first, it might be hard to find out the strengths and weaknesses of your team because Vietnamese are generally shy and don’t naturally “sell” themselves. One of the biggest problems here is with lack of confidence: both with confidence in their abilities to succeed and in their confidence to ask clarifying questions without looking stupid (so assumptions are made and things are shoved forward at times). Don’t be surprised if you get lame responses for why something is late or wasn’t done as asked. Patience and polite firmness (“I’m sorry but I can’t allow or do that.”) are the only ways to be effective in those situations. Your top talent on the team might be the most reserved and you’ll have loudmouths who will talk and obfuscate their way to the top if you allow them to. Figuring out who is the real deal and who is just puffing his/her chest will take some time to figure out. Don’t underestimate or write off someone here based on a first impression; once you get to know them then you will be able to discern if they are competent or if they are a liability. It could be that with the right training, a good worker can become a great one.

Great workers can be hard to find because there is generally not much appreciation for the consequences of doing something one particular way versus another. The path taken by most workers here is usually the shortest and the one with the least resistance, especially in blue collar fields. This short-term focus can be incredibly frustrating at first because it requires addressing basic elements that you can take for granted elsewhere. For example, trade workers might show up to repair something in your home and then proceed to use your kitchen knives as their tools or your dish cloths as their rags to wipe down things (if they even clean up afterwards). They might even show up hungover or drunk as well so it could make for some interesting home repair experiences. The point here is that workers require more supervision than in the west (at least for the first time going through a process) or else you will find them using your butcher knife as a shovel, your steak knife to scrape paint off steps, and your paring knife to apply some chemical goo somewhere (yes those are all real examples but skill levels vary across local organizations).

Training Vietnamese Workers

That being stated, the best way to train workers here is through positive reinforcement, i.e., focusing on the things that are done right and minimizing the focus on negative aspects unless they are mission critical, e.g., “Do it more like the way that you previously did.” Any critical feedback should be done in private and praise should be given in public. Be cognizant of age differences between you and your counterpart because if you are younger than him/her then it could result in some awkward disagreements, especially if you feel that s/he is wrong (elders are usually given authority) and vice versa. The best way to move forward in situations like those is to focus on consistent future performance and try to get everyone on board in a harmonious way. Eventually, once you bond with your teammates, you will find that they will smile more, laugh more, and may even touch your arms or shoulders more when communicating with you. Some workers may be more affectionate than others but it’s just a way of showing you are one of them especially if there are language barriers. Regardless, one thing is guaranteed: they will all nap so it might be wise to change training schedules to meet those napping needs. Napping is part of daily life here during lunchtime; the workers will either fall asleep at their desks or find a beanbag or other comfortable surface (or will even end up on the floor). As they say, “don’t knock it until you try it.”

Future Vietnamese Workforce Potential

So while the Vietnamese workforce definitely has room to improve and grow, the trend in recent years is positive because the youth here are simply great. They are bright, optimistic for the future, talented, eager to learn, and focused on improving their socio-economic conditions. It might be this current generation that can unlock the full potential of Vietnam’s human capital resources. Those who study abroad are bringing back a different mindset for problem solving to share with the local organizations here and are actively involved in helping other students who haven’t had similar opportunities. The youth are interested in working with and learning new techniques, best practices, and new skills from foreigners and are, more importantly, generally honest about the challenges ahead for today’s Vietnam.

While it won’t be easy working with locals, and projects might take longer than you originally thought, and you might have to do more than your “fair share” of responsibilities to get something done the right way… with the right team, the right attitude, and the right training anything is possible in Vietnam. And soon enough with new technologies, new skills, and new attitudes that are being adopted on a daily basis, everything will be possible in Vietnam.