Last updated: Tuesday, May 21, 2013
Change for Survival and DevelopmentPosted: Monday, May 28, 2012
When there is an opportunity, a company must respond quickly and accurately to such questions as: What production and business activities will be promoted, how capital and human resources will be mobilised; how to make government effective, and so forth, said Mr Do Thanh Nam, Director of Win-Win Strategy Consulting and Supporting Company in an interview on difficulties and opportunities of enterprises in 2012 with the Vietnam Business Forum. Thu Huyen reports.
Mr Nam said, a majority of companies were caught in worst-ever difficulty in the first four months of 2012. However, this does not mean that there is no brake on that hardship. Even, the dilemma brings in new demands and opportunities for enterprises, especially when the Government is seeking measures to bail out ailing businesses. Importantly, businesses know how to seize opportunities and have long-term strategies to survive and develop sustainably.
In the current context of economic slowdown, what are opportunities and challenges for Vietnamese enterprises?
The Vietnamese economy is fraught with numerous difficulties: Sovereign debt crisis in the world, freezing stock and real estate markets, volatile gold prices, particularly weakening purchasing power, growing inventory and hard capital access. Hardships can be felt through every breath of the economy and daily activities of enterprises. A lot of problems need to be resolved immediately, like restoring macroeconomic stability, reducing inflation to a single-digit rate, and boosting sales and export.
As often as not, enormous challenges of the economy also open up good opportunities for business development. Capital is fleeing from troubled economies and landing on good investment destinations where Vietnam is named. This year, Vietnam will accelerate Free Trade Agreement (FTA) negotiations with other countries and regions to enjoy lower import tariffs in signing nations together with other incentives. However, protectionism also increases.
Hardship is changing consumer behaviours and engendering new needs. This is the time for companies to change and have new strategies to take advantage of market opportunities and competitors’ weakening. The release of a compressed spring can be used to describe this case.
What are heavily shouldering Vietnamese businesses?
Vietnamese are now suffering a lot of difficulties. If these are not resolved, the entire economy will be jeopardised.
The first problem is rising input costs, weakening purchasing power, sluggish sales, soaring inventories - with some sectors seeing a100 percent rise in inventories, shrinking production, widening variable and fixed cost on a unit of product.
Second, cash shortage and poor liquidity have sent many enterprises to the brink of bankruptcy.
Third, the crisis started from 2008 has weakened the resistance of companies. Many felt discouraged and impatient because they could not stand waiting for support policies from the Government for working out new development strategies in the hard time.
The Vietnamese Government’s macro-economic policies are drawing a brighter picture of business community. What do Vietnamese enterprises need to do to take advantage of existing opportunities?
In general, difficulty often entails new opportunities. When there is an opportunity, a company must respond quickly and accurately to grasp it. It can use a variety of solutions to catch the chance like M&A horizontal or vertical partnership. This diversification must be attached to sustainable development.
It also needs to focus on managing financial resources effectively. It must have a safe capital source in order to be free from the pressure of repayment at the first stage of making profit.
To support outlined strategies, it is necessary to synchronise all elements that constitute its activities like management model, control process and workforce. When there is an opportunity, it must respond quickly and accurately such questions as: What production and business activities will be promoted, how capital and human resources will be mobilised; how to make government effective, and so forth.
It is noted that a company must tie its activities to community and social interests in order to attain sustainable development. It should not look at the money spent on this activity in the angle of expenditure. Instead, it should consider it a long-term investment for its sustainable development. A business is an element of the economy and its strength will contribute to the sustainable development of Vietnamese economy, and vice versa.
Partnership and cooperation are a good opportunity for businesses in crisis
Michael W. Michalak, former US Ambassador to Vietnam
The Vietnamese economy is undergoing a difficult period, especially for SOEs, banking system and regulatory reform. Nevertheless, Vietnamese enterprises still have best opportunities to compete in the region and the world. Many foreign companies want to become partners with Vietnamese enterprises for the sake of more sustainable development.
In the coming time, Vietnam needs to make more appropriate policies to drive up economic growth and investment cooperation. This is the right time for its businesses to focus on marketing methods and promote investment cooperation. Competition may force Vietnamese businesses to enhance quality, costs and services. In fact, most Vietnamese companies and businesspeople are young; thus, they are very eager to learn foreign methods, lessons and practices. Cooperation with foreign companies is really a good opportunity, not a challenge, as many people think.
Businesses need to triumph over statistics
Mr Nguyen Tri Dung, CEO of NICD Japan
Vietnam still lacks Vietnamese-styled business thinking. Businesses must go beyond statistics data. This is not a period of economic upheaval but a period of global restructuring. Business leaders and State leaders must take action suitable with reality, not just wait for better future in the following year.
A right direction will produce a huge effect on the development of an enterprise in particular and on the entire economy in general. In the coming time, we must have more meetings for business leaders to discuss topics of joint concerns and seek out best ways to escape the time of crisis.