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VIETNAM VIETNAM (THE SOCIALIST REPUBLIC OF VIETNAM) Francis Piron, Ph.D., 2013.

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Presentation on theme: "VIETNAM VIETNAM (THE SOCIALIST REPUBLIC OF VIETNAM) Francis Piron, Ph.D., 2013."— Presentation transcript:

1 VIETNAM VIETNAM (THE SOCIALIST REPUBLIC OF VIETNAM) Francis Piron, Ph.D., 2013

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

3 BRIEF HISTORY LONG COLONIZED BY CHINA UNTIL 10 TH CENTURY IMPERIAL DYNASTIES MID- 19 TH CENTURY-MID 20 TH CENTURY: COLONIZED BY FRANCE HO CHI MINH (NEXT SLIDE) DIVISION BETWEEN NORTH (COMMUNIST) & SOUTH (NATIONALIST) VIETNAM US-SUPPORTED VIETNAM WAR (ENDD IN 1975) VIETNAM

4 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 VIETNAM

5 20 TH 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 INVASION OF CAMBODIA 1979 – BORDER WAR WITH CHINA 1986 – ECONOMIC & POLITICAL REFORMS LEADING TO INT’L REINTEGRATION DIPLOMATIC RELATIONS WITH MOST NATIONS 2007 – VN JOINS WTO VIETNAM

6 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” VIETNAM

7 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 VIETNAM

8 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 VIETNAM

9 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 VIETNAM

10 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 VIETNAM

11 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 VIETNAM

12 THE ECONOMY UNDER- AND UNEMPLOYMENT … SOME PICTURES VIETNAM

13 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, 116 th IN THE WORLD, (TRANSPARENCY INTERNATIONAL) VIETNAM

14 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. VIETNAM

15 Profile of Vietnamese Management System before the Renovation Policy ItemCharacteristics Planning termShort range (1-2 years) Control devices(Time) punching clocks; frequent observation Quantity controlSome quality control Authority definitionUnclear; collective responsibility Degree of decentralisation/delegation Low Leadership stylePaternalistic - autocratic Trust and confidence in subordinatesMedium; ‘men of the system’, ‘organisation men’ Personnel policyNot stated, not transparent, regulated and standardised Communication patternTop-down Training programmes Many (e.g., on-the-job training), but often not effective and relevant MotivationMonetary and psychological Employee moraleNot always high AbsenteeismLow to medium ProductivityLow VIETNAM Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai Vuong Research and Practice in Human Resource Management, 10(2), (2002)

16 ¨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 VIETNAM Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai Vuong Research and Practice in Human Resource Management, 10(2), (2002)

17 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. VIETNAM Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai Vuong Research and Practice in Human Resource Management, 10(2), (2002)

18 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. VIETNAM Management Styles and Organisational Effectiveness in Vietnam, Truong Quang & Nguyen Tai Vuong Research and Practice in Human Resource Management, 10(2), (2002)

19 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 Vuong Research and Practice in Human Resource Management, 10(2), (2002)

20 VIETNAM EASE OF …2010 RANK OF 183 ECONOMIES STARTING A BUSINESS116 CONSTRUCTIONPERMIT69 EMPLOYING WORKERS103 REGISTERING PROPERTIES 40 GETTING CREDIT30 PROTECTING INVESTORS172 PAYING TAXES147

21 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) VIETNAM

22 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 … VIETNAM

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