What do business owners need to know about doing business in Vietnam?
When you’re thinking about doing business in Vietnam, do not think short term. Vietnam has maintained above 6% GDP growth on average for more than 10 years and Vietnam's population of ultra-high-net-worth individuals has the highest growth rate in the world. With the fastest growing middle class in ASEAN according to the Boston Consulting Group, not only is it a production base but is also a substantial consumer market. But it is not a place to make a quick buck.
It is still quite bureaucratic and not very centralised. Vietnam rewards those who are patient. Vietnamese are a 'cooperative' culture versus a 'competitive' culture like Australia. Traditionally the legal system has not been strong. So a common foundation of trust is relationships above results. This isn't to say that results and merit are not important. They are. But make sure you take the time to explore values and value drivers rather than just the economics of the deal.
Vietnam is an indirect communication culture so people may not express exactly how they feel. Learn how to read what is not said. Build strategic partnerships - even if entering the market as a greenfield venture. Strategic alliances are vital. Find people that are trusted allies to tell you how it is. If businesses take the time to genuinely understand the market and culture, they can also then identify what is the same amongst us all.
What is the biggest difference Australian business owners will notice when doing business in Vietnam?
I think one of the most notable differences in Vietnam is that the population is young. 70% of the Vietnamese population are under 35 so it is not surprising to see a senior executive or even CEO of a large organisation in their 30s. People are entrepreneurial with drive and optimism, which is not necessarily that prevalent in Australia.
Without a human capital strategy that can really speak to a middle class that is highly aspirational, you'll find high attrition rates as good supply of labour especially in middle management is hard to come by. Foreign businesses will also be surprised at how costly staff may be, especially senior management. Many think that because Vietnam is a middle income ASEAN country, labour is cheap. This may be true for lower level staff, but good senior management who can think critically and strategically, will not be cheap.
Another difference is the bureaucracy. Vietnam is working hard to streamline its processes. But foreign businesses may get frustrated as to how many steps it takes to conduct a simple administrative procedure with a government agency.
What have been some of the recent achievements of the Australia Vietnam Young Leadership Dialogue?
Since the first Dialogue in 2017, our alumni have led the privatisation of an airport in Vietnam, launched a social enterprise for victims of domestic violence, pursuing a city sister city relationship with the Gold Coast, received an Australian Government Endeavour Award and investing in women regionally. We have been able to meet with both prime ministers, have dinner with Former Foreign Minister the Hon. Julie Bishop, meet the President of the Vietnam National Assembly, have the Governor General of Australia host a reception at Admiralty House and meet the Duke and Duchess of Sussex. Our alumni continue to maintain a very active network, sharing ideas and opportunities in order to advance prosperity.
What insights will you be sharing at the WA-ASEAN Trade and Investment Dialogue?
The opportunities that Vietnam represents for Australia and specifically for WA are substantial. Australia's trade relationship with NZ is about $18 billion but with Vietnam it is just $11 billion when it could be much higher. Even in overseas education alone, Vietnam spends $3bn USD per year according to HSBC. But in the latest Australian government data, Vietnamese student enrolments to WA dropped by 13.7%. Even the Northern Territory grew by 0.4%.
There are many areas of challenge that Vietnam faces that also faces Australia - climate change, industry 4.0, governance. Many say that Australia doesn't have an issue with governance like Vietnam does. Look at the Banking Royal Commission. It may not be the same, but one can still call it a crisis of governance. Therefore, instead of thinking only about what we can export to Vietnam, think about how together we can add value, contribute to common issues and add to prosperity along the way. That is how lasting relationships can be built. And in a complex geo-political climate, Australia needs Vietnam in multi-dimensional ways.