Vietnam’s solid position as an attractive manufacturing country for Swedish companies is strongly confirmed. However, the global landscape of production is rapidly shifting and in order to keep its position, Swedish and Vietnamese manufacturing firms agree that Vietnamese firms must continue to work hard to strengthen its overall competitiveness.
Vietnam Business Forum reporter Thu Huyen conducted an interview with the Swedish Ambassador to Vietnam, Staffan Herrström, on how to help Vietnam’s enterprises improve competitiveness, as well as implement Swedish Values on Corporate Social Responsibility (CSR).
How do you assess the competitiveness of Vietnam’s enterprises in the context of global production?
Several measures have been implemented and significantly strengthened business prospects here. In addition, the awareness of the need to simplify for businesses is obvious – with Project 30 as a clear example. Lowering the administrative burden for companies is a key issue in many countries, including Sweden. One hour less spent on administrative matters will mean one hour more spent doing core business.
The Swedish Trade Council has noted increased interest among Swedish companies in sourcing production in Vietnam. Some of the reasons for this are the overall competitiveness of the industry and Vietnamese Government policies for the overall business environment.
I have also noted that the Government of Vietnam has acknowledged the need to strengthen the country’s competitiveness by opening up interactions with the business community both at home and abroad by arranging events such as Vietnam Business Forum. I believe that the discussions were very open and the government was also keen on taking advice from the businesses. The recently released report on Vietnam’s Competitiveness will also be a valuable contribution to further developing Vietnam’s businesses.
What should Vietnam do to strengthen its overall competitiveness?
Vietnam is facing several challenges for the future. In order to be competitive several issues must be addressed. First, to strengthen competitive ability on the global market, it is increasingly important to meet the demands from the consumers and businesses around the globe. Businesses must take in account all factors involved in production – such as working conditions, environmental effects of the production and other factors that the foreign consumer weighs when buying a product. Companies must take into account CSR aspects to be competitive on the export market. Second, global climate change and environmental issues must be dealt with. It will be increasingly important to have sustainable production that is environmentally friendly. Third, the infrastructure must be upgraded - this includes measures to ensure sustainable energy solutions, modern roads and other key factors to improve companies’ abilities to produce and access their goods. Fourth, in order to move up on the value chain, Vietnam needs to emphasise innovation and creative thinking. It is important to boost knowledge in the workforce today and also tomorrow. Human resource development will be a key factor in strengthening the country’s overall competitiveness. Fifth, overall education reform is also crucial - even though Vietnam has reached the Millennium Development Goals (MDG) - the focus should now be on raising the quality of Education to meet the needs of tomorrow’s enterprises.
Even though Vietnam has opened up the economy, much remains to be done. There is still a clear lack of competition in several sectors. The State sector’s dominant role in the economy needs to be shifted to a less dominant role. A continuation and acceleration of State-owned enterprise equitization is needed to further strengthen the competitiveness and effectiveness of Vietnam’s businesses.
The last but probably the most important issue that should be addressed is the prevalence of corruption and lack of transparency. It is crucial to tackle these issues to strengthen Vietnam’s overall competitiveness.
As a country with high CSR experience, could you please talk about Swedish values on CSR, and a well-implemented CSR regime which can be applied to Vietnam enterprises to improve their competitiveness?
There is no easy answer to that question. I believe that this must be solved on a case-by-case basis. Nevertheless, some key issues should be highlighted.
The Swedish model of doing business is an important part of the explanation for why a country like Sweden, with a population of only nine million, is the home of so many products and companies with worldwide reputations.The “Swedish model” is based on the idea of close cooperation between the state, employers and workers. I believe that Sweden’s success has been built on our companies’ commitment to act as responsible players at home as well as in other countries where they are established. By doing this, in a fair way, companies have been able to continue to be competitive. Moreover, we believe that CSR is most successful when it is business-owned and business-driven. Whatever frameworks or tools that are developed, they must make sense in a business context and in the realities of day-to-day decision-making in companies.
To be a responsible player, actions must be taken in several fields - it is about work environment, gender equality, abolishing child labour and taking into account the environmental effects of the business.
It is certainly not an easy task to implement core CSR values in an organisation and it will take time. It will also require full support from the management of the company and it should be something that includes the total work force.
The benefits of CSR will of course vary, depending on the business, the specific actions proposed and the effectiveness with which they are implemented. However, we do know that a company working actively with CSR has a greater chance of attracting the right employees, not to mention retaining and motivating them. The company will also have a greater opportunity to attract consumers and thus increase their sales. In a globalised world where news spreads very fast, this is crucial. The consumer weighs several aspects of the product when choosing it. The price is often of least concern. The consumer is also interested in how the product has been produced - if it has been produced under fair and sustainable conditions. Well-implemented CSR will also bring other benefits, such as energy savings by working in a more energy efficient way.
So, what support can Sweden provide to Vietnam’s enterprises to implement Swedish Values on CSR?
CSR is a voluntary undertaking by companies. The vast majority of Swedish companies working with Vietnam’s companies are well aware of the need and benefits of well implemented CSR. They have seen how Vietnamese companies have improved their business by improving working conditions and finding environment-friendly solutions that often lead to energy savings. By complying with the Swedish companies’ values they have also been able to sell their products in more markets. Several Swedish companies have developed their own methods - IKEA is a clear example with their IWAY. IKEA is assisting their companies with advice on how they can improve their production to meet IKEA’s needs and at the same time save money on their own production.
In the beginning of next year, the embassy will also set up a facility, CENTEC, which will focus on environmental and CSR issues. The object of CENTEC is to generate sustainable partnerships between Swedish and Vietnamese actors in the next three years through matchmaking events, etc. CENTEC is expected to be launched during spring 2011.
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