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Knowing Vietnam

Pham Hoang Duong


Broker Assistant
17th Mar. 2006
Agenda

• Business Environment
• Maritime Industry
• History, Culture and other matters
Vietnam – a quick glance
Total area: 329,560 sq km
Land: 325,360 sq km
Water: 4,200 sq km
Land boundaries:
Total: 4,639 km
Border countries: Cambodia 1,228 km,
China 1,281 km, Laos 2,130 km
Coastline: 3,444 km (excludes islands)
Population: 83,535,576 (July 2005 est.) – male:
49%, female: 51%
59 provinces (tỉnh) and 5 municipalities (Ha Noi – thủ
đô, Ho Chi Minh, Hai Phong, Da Nang, Can Tho –
thành phố)
Source: CIA The World Factbook (
http://www.cia.gov/cia/publications/factbook/geos/vm.html)
Subjective Opinions
• Tend to Follow China in terms of policies,
structures, strategies
• Highly Imitative on China’s Developments,
usually a step behind
• On surface, two wings: supporting China
(older) vs. supporting U.S.A. (younger) but
the China supporter is more powerful
• Complicated Informal Structure: unclear
decision making level. Stipulated from
behind by many retired leaders -> Who is
the most powerful decision maker?
Business Environment

• Recent milestones.
• State Owned Enterprises (SOE).
• Legal framework.
• Business practices.
• Private Sector.
• Others.
Recent Milestones
• 1986: Reformation process – “Doi Moi”
in Vietnamese.
• 3rd Feb. 1994: Removal of U.S.A.
embargo.
• 1995: Became member of ASEAN and
AFTA.
• 2001: Bilateral Trade Agreement with
U.S.A.
• 2006: may be WTO member.
State Owned Enterprises
• Long established: after independent from
French, following Soviet Union model
• 1994: reduce half of 6,264 SOEs
• 1995: Law on SOEs enacted and enable
them to do business freely with others
including foreign partners
• Ownership Transformation Process: known
as equitization (insider privatization,
similar to Chinese)
SOEs (cont.)
• Ownership & Management come
from engineers and technicians
• lack of management, leadership
skills
• On average: state holds 46%
equitized enterprises, employees
38%, outsiders 15%.
• Only 20 equitized enterprises with
foreign ownership
3 Types of SOEs We Should
Know
• Originated from Decisions No. 90 and
No. 91
– General Corporations 91: report to
Office of Government. General Director
is appointed directly by the PM
– General Corporation 90: report to line
Ministries. Director is appointed by the
respective Ministers
– Corporation under provincial
governments.
Legal Framework -
Weaknesses
• Weak, complicated, uncompleted,
unpredictable legal system.
• Lack some legal concepts.
• Many backdoors, different
interpretations
• Try to construct many laws, codes
due to WTO pressure.

=> Need very competent, smart


Business Practices
• Lack Management Skills
• Many Management by Politics
• Weak in legal concept
• Short term vision
• Little Investment in market research
• Different ways the North and the South in
doing business (see later)
• Businesses within family, close friends,
clan. Distrust of outsiders
Vietnam Maritime Industry
Overview of the industry – Main
Players
• Maritime Administration: Vietnam Maritime Administration
(Vinamarine)
But implementing Marpol, Solas under Vires (Vietnam Register)
• State owned Companies:
– Shipping Line: Vietnam National Shipping Lines (Vinalines) and
others (all under Vinalines) such as Vosco, Vinaship,.. Plus some
JVs between Vinalines and foreign partners such as Gematrans
– Shipbuilding: Vietnam Shipbuilding Industry Corporation
(Vinashin),..
– Port: Saigon, Hai Phong, Quang Ninh,.. (under Vinalines).

• Education and training:


– Vietnam Maritime University (Vimaru), Maritime colleges
• Associations and clubs:
– Vietnam Shipowner Association
– Vietnam Port Association
– Captain Club
– Maritime Lawyer Club
Overview of the industry

Office of Government

Ministry Of
Transport
Vinamarine
BUT

Maritime Industry Vinalines

Vinashin
Vinamarine (like MPA)
– Constructing and executing strategies, master
plans, projects
– Constructing and executing rules, regulations,
standards, procedures, …
– Controlling ports, access channels, anchoring
areas
– Controlling registry of seamen, educating and
training for seaman
– Maritime safety and environment anti pollution
– Managing investment projects
Vinalines
– Containing almost all state owned lines,
major ports, maritime services,…. in
Vietnam.
– Doing business in many fields, whether
maritime related or not i.e. maritime
transport, land transport, forwarder, oil
transport, construction, ..
Vinalines
• Shipping lines
– Vosco
– Vitranschart
– Vinaship •JV
– Falcon –Gematrans
– Nosco –Cosfi
– Vanlang –Vinabridge
– Dongdo –Vijaco
• Port –Transvina
– Hai Phong
– Saigon
–Phili-Orient Lines
– Quang Ninh
– Dangng •Stock Company
• Maritime Service –Viconship
– Vosa –Gemadept
– Inlaco –Marina
– Marine Consult –SAFI
– Marine Supply
– Iseco
– SPTS
Vinashin
– Containing major shipyards in Vietnam
– Doing business in many fields:
shipbuilding, transportation, consultant,
import & export …
Other Tanker Owners (SOE &
offshoots)
• VITACO: 90.112 DWT (30% of Petrolimex –
15% national demand)
• AULAC: 33.560 DWT (for Petec, Petechim,
Saigon Petro - 07% national demand)
• VTXD THUY 1: 70.248 DWT (20% of
Petrolimex – 10% national demand)
• VOSCO, CUU LONG, VINASHIN and OTHER
domestic lines: 3% national demand
Petroleum transportation for
domestic consumption - Market
share

• Vietnam tanker owners: 35%


• Foreign owners: 65%
History, Culture and
Others
54 different ethnic
groups, Kinh – 87%
Vietnam – a quick glance
Major cities Area (km2) Population GDP
(bil. VND/%)

Ha Noi 912 3,082,800 20,280


(0.02%) (3.7%) (7.8%)

Ho Chi Minh 2,095.2 5,730,700 131,523


(0.6%) (7%) (18.5%)

Hai Phong 1,526.3 1,770,800 12,521


(0.4%) (2%) (1.7%)

Da Nang 1,255.5 764,500 9,564.4


(0.3%) (1%) (1.3%)

Can Tho 1,390 1,122,500 n/a


(0.4%) (1.3%)
HISTORY IN BRIEF

• History:
– Country of Wars
– 111 BC - AD 939: Chinese
Domination (1000 years)
– 1858-1954: French
colonization
– 1954-1975: North-South war
(American backed in the
South)
– 1975: North-South
Reunification

CULTURE
• Strongly influenced by Chinese
ideologies and religious
beliefs, namely Confucianism,
Taoism and Buddhism.
• Added some Western elements
to the traditional Vietnamese
culture
• Vietnamese is not Chinese
• Some People Don’t like China,
Others hate. Do not confuse
Vietnamese with Chinese.
Always consider China as
Biggest INVADER
SOCIAL VALUES
• Family-Centred individual
life & Backbone of society
• Respect to people senior in
age, status & position
• Confucian emphasis on
hierarchy of relationships
and collectivism
• Tendency to hide feelings,
avoid conflicts and reject
confrontation
• Avoid physical contact
between opposite sexes,
Hugging or kissing in
greetings is not usual
• Self-respect and saving face
Social Practices
• Not offensive in Vietnamese
culture to ask personal
questions
• Vietnamese are quiet and
attentive
• Good at memorizing and
following directions
• Shy away from oral skills
• Unfamiliar with body language
• May not look in the eyes of
others, do not use hand gesture
• Rely on printed information,
and regard the mentor as the
complete source of knowledge.
• Unfamiliar with group working,
prefer to work independently
Religion
• Many religions: Buddhist,
Christian, Protestant,
Muslim, and other local
religion e.g. Cao Dai, Hoa
Hao…
• Government controls
religions very strictly,
accept all kinds of
religions only on the
surface
• Hostile policy against
Protestant and some
local religions

=> Just do business and


you will be safe.
Language
• The Vietnamese uses
alphabet which has the
following 29 letters, in
collating order:
– aăâbcdđeêghiklm
noôơpqrstuưvxy
• Vietnamese Don’t Use
Chinese Characters
• Sinitic-Vietnamese
• Different tones among
provinces and regions
Other matters

Subjective ideas – on the North people viewpoint


What Vietnamese is taught to
be proud of?
• Beautiful, courage and rich-in-
natural-resources country
• Long established history
• Winning French, America in the
war
• Ho Chi Minh: Uncle Ho.
• National Heroes: Quang Trung –
considered as Meiji in Japan. Le
Loi, Tran Hung Dao, Li Thuong
Kiet…
• Many times win Chinese invaders
including Mongolian.
• Vietnamese is very good at
studying, achieving lots of
international awards on
mathematics, physics,
Subjective ideas – on the North people viewpoint
chemistry,…
Young Generation
• Born in 80s (after the war) and in 90s
(Reform process – “Doi Moi” in
Vietnamese).
• Proud of the country history of fighting
against invaders (Chinese, Mongolian,
French, American)
• Focus on studying, respect high
qualification and slightly ignore
personality.
• Not good in team work
• Focus on making money but want to
work for a company, few has
entrepreneur spirit.
• Relatively more open especially born-
in-city and /or able-internet ones (very
small number).
The North and the South
- some subjective ideas -

The North The South


Hanoi: politic capital Ho Chi Minh (Sai Gon):
business capital
Vague, unclear Business minded, clear

Family oriented “Party” oriented

Saving habit Consuming habit

Aggressive attitude to Chinese Easy, large Chinese


community in Ho Chi Minh city
– Cho Lon Area
Thank you for your
attention!

Question & Answer

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