Doing Business in Vietnam - Case Study Example

Cultural Ambassador: Viet Nam Viet Nam Today Viet Nam is an important nation in Southeast Asia, bordered by the South China Sea on the east, and the countries of China, Laos, and Cambodia in the north and west. The country today has a population of approximately 90.5 million people1, 60% of whom were born after the end of the Vietnam War in 1975 and are under the age of 302. Viet Nam’s economy is fairly evenly divided between agriculture, industry, and services, although the proportion of the GDP (Gross Domestic Product) contributed by agriculture has been declining, from about 25% in the year 2000 to just over 20% today.3 Nevertheless, Viet Nam is a major source of rice, pepper, rubber, and coffee. The country also has large industries in garment- and shoe-making, automotive tires and other parts, and electronic parts such as wiring. Viet Nam History The proper name of the country is “Viet Nam”, and not “Vietnam” as one word, which was the name as written by the French during the time they occupied by the country (between 1887 and 1954). The name reflects the dual nature of the country – the highlands and the lowlands – and reflects the creation myth of Viet Nam, which came about by the marriage of lac Long Quan, King of the Sea, and Au Co, Princess of the Mountains.4 Throughout much of its history, Viet Nam has been occupied by foreign powers; first the Chinese, then the French, the Japanese during World War II, and finally the Americans in the South during the long Vietnam War. The modern history of Viet Nam dates from April 30, 1975, when the capital of South Vietnam, Saigon (now called Ho Chi Minh City) fell to forces of Communist North Vietnam, uniting the country. Viet Nam’s experience with foreign influences has made the people intensely nationalistic and to some degree suspicious of foreigners on the one hand, but on the other, has also given them great experience with other cultures and an ability to understand and adapt easily in international business. Vietnamese Culture The culture of Viet Nam is strongly influenced by Confucianism, which defines the place of an individual among others in terms of five relationships5: Ruler and subject Husband and wife Parents and children Brothers and sisters Friend and friend The family is at the centre of Vietnamese culture, and it includes not only one’s immediate family, but the extended family – cousins, aunts, uncles, grandparents, in-laws – and the honoured ancestors as well. Vietnamese Culture in Business The nature of Vietnamese society is reflected in the way business relationships are developed and managed. Hierarchical: There is a great respect and deference for authority, and likewise, there is an expectation of the same from subordinates. Between equals, the respect and deference is mutual. Collective: The welfare of the group is placed above the welfare of the individual. Business relationships are personal, but are part of a complex web of personal connections, and the individual considers the effect on the whole in any action.6 Personal Relationships: There is no real separation between “business” and “personal,” as there is in Western cultures.7 “Face”: “Face” is a complicated concept that can be best thought of as a person’s “honour” or “dignity.”8 Embarrassing someone in front of their peers, for example, can cause them to “lose face.” Rewarding someone instead would cause them to “gain face” – but on the other hand, it might embarrass their peers who are not rewarded. Being careful of one’s “face” and that of others is an important part of business and personal interactions. A Problem There are many guides to help foreign businessmen do business with the Vietnamese culture, but how can Vietnamese businessmen interact successfully with people from other countries? The Solution The way we can develop a guide for Vietnamese business people doing business across borders is to examine some of the cultural differences between Viet Nam and other parts of the world, and to “work backwards” from the guides for foreigners doing business in Viet Nam. Comparing Communications Styles Vietnamese people, like most Asians, are more “high-context” communicators than Westerners, who are “low-context”.9 What is not said in a conversation with a Vietnamese person – the circumstances of the meeting, the place, non-verbal cues such as facial expression or gestures and tone of voice, and the relative social standing of the people involved – is just as important if not more so than the actual words. For example, someone who disagrees with someone who is speaking is likely to remain silent, which sends a message without causing the other person a loss of face.10 Westerners, on the other hand, are “low-context” communicators. The actual message being delivered takes priority over any other cues, and carries the real meaning. Non-verbal communication or other factors may add emphasis one way or another, but they do not change the basic message. As an example, consider how much communication is done through text or e-mail – successfully, most of the time – without ever seeing the other person, where it is only the words that can carry meaning and expression. The Western mode of communication, in contrast to the Vietnamese, means that someone who remains silent is not disagreeing with what is being said, but rather agrees and has nothing to add, or is at least not challenging the message. Comparing Communications Styles (cont’d) Vietnamese have a longer sense of time than Westerners, which is partly due to their agrarian heritage and partly due to their Confucian roots; they think in terms of seasons, rather than hours or days or weeks.11 That does not mean they do not appreciate and maintain punctuality – they do – but they are suspicious of a need to rush into a decision when there is no obvious reason to do so.12 Westerners can be frustrated by this, because they generally behave the opposite way – they may be suspicious of waiting when there is no obvious reason to do so. To a Vietnamese businessperson, doing business overseas may feel like the world’s turned upside-down! Although doing business with other Asian cultures is easier because there are shared values (in some respects) about family, personal relationships and one’s place in a group, modes of communication, and sense of time, when doing business with Western cultures, the Vietnamese businessperson may feel as though everything is exactly the opposite of what he or she has always known. Therefore, a few simple tips for the Vietnamese businessperson to follow when dealing with Westerners: Be Direct: Make eye contact, and say clearly what you mean. Being indirect or silent can be taken as a sign of weakness or lack of decisiveness. Be Prepared to Act Quickly: Westerners are not necessarily rash in their actions, but because they have a more direct way of communicating – which does not require as much time to consider and interpret – they generally can, and do, make decisions as quickly as possible. Remember that “Business” and “Personal” are Kept Separate: Most Westerners think of their relationships with people in much narrower contexts than Vietnamese do, and a business interaction is not necessarily a personal connection. Where your first contact with a Vietnamese businessperson may very well result in a conversation about your family, your education, and your personal views on things and not at all about the business at hand,13 a Western business contact may never inquire about these things, nor share the same information about himself. IMPORTANT TO REMEMBER Many Western businesspeople are sensitive to cultural differences, and will strive to be understanding and accommodating to contacts from other cultures. Also, because Viet Nam has a young population, many Vietnamese businesspeople are more adaptable to cultural differences, and may not find working with people from different places as difficult as it may sound. The best advice for the Vietnamese businessperson doing business internationally is the same as the advice given to foreign businessmen wishing to do business in Viet Nam: seek the assistance and guidance of a knowledgeable local contact. Example: Doing Business in America One way in which a Vietnamese business can successfully enter a foreign market is through the assistance of other Vietnamese already in the country. In Maryland, USA, a group of local Vietnamese businessmen has formed a Business Association to help Vietnamese SMEs in the garment industry sell directly to US customers. The Vietnamese businessmen who are long-time residents of the US understand both the US business atmosphere and the cultural attributes of their countrymen, and can help them make a smooth and successful enterprise.14 Example: Doing Business in Korea In Korea, a Korean firm has set up a consulting business to advice Vietnamese businesspeople of legal and regulatory matters when doing business in the Korean market. The cultural differences are not as great, but there are still differences in procedures and requirements.15 Thus while in the US (a very Western country) it is better to get help from other Vietnamese businesspeople, in Korea the Korean businesspeople can relate well enough to their Vietnamese colleagues, and can just focus on the specific details of doing business. References Ashwill, M.A. (2005) Vietnam Today. Boston: Intercultural Press. CIA. (2011) “East and Southeast Asia: Vietnam”. The World Factbook, update 14 June 2011. Available from: https://www.cia.gov/library/publications/the-world-factbook/geos/vm.html. “Firms need legal advice to break into Korean market’. (2011) Viet Nam Business News, 24 June 2011. Available from: http://vietnambusiness.asia/firms-need-legal-advice-to-break-into-korean-market/. “Local businesses see greater US opportunities”. (2011) Viet Nam Business News, 17 June 2011. Available from: http://vietnambusiness.asia/local-businesses-see-greater-us-opportunities/. Smith, E.D., and Cuong Pham. (1996) “Doing business in Vietnam: a cultural guide”. Reprint from Business Horizons, May-June 1996. Available from BNET: http://findarticles.com/p/articles/ mi_m1038/is_n3_v39/ai_18348266/. “Vietnam”. (2005) Geographia.com [Website]. interKnowledge Corp., 2005. Available from: http://www.geographia.com/vietnam/. “Vietnam - Language, Culture, Customs and Etiquette”. (2010) Kwintessential [Website]. Available from: http://www.kwintessential.co.uk/resources/global-etiquette/vietnam.html. Read More