Restructuring Businesses Ensures Successful Integration

Restructuring helps businesses not only to safely exit from crisis, but also to correctly approach world economic development and integration. For Vietnamese businesses, restructuring has become more demanding. Vietnam Business Forum reporter Lan Anh had an interview with Dr. Doan Duy Khuong, VCCI Vice President and Chairman of Vietnam Business Council for Sustainable Development (VBCSD).

 

As a matter of fact, each economic crisis has led to a major restructuring. At the macro level, economic crisis helps managers and policy planners realize shortcomings of the economy and set forth long-term economic orientation. Therefore, after the crisis is the time to restructure the economy more logically to ensure economic recovery and sustainable development. At the micro level, crisis compels businesses to restructure their organization and activities, cutting off inefficient parts and finding a more efficient orientation.

 

In all circumstances, restructuring is closely related to business environment and State policy mechanism.

On one hand, business restructuring is done to accommodate to changes in the business environment, while on the other, policy and long-term development strategy must be based on the unique development of each business and industry. Due to the impact of the crisis, business restructuring in Vietnam seems peaceful outwardly but turbulent inside each business with bankruptcy, cessation of activities, merging, business sale, big changes in structures of capital, organization, business strategy, markets, products and technology.

Vietnam has to restructure the economy and accelerate industrialization and modernization to become a modern industrial country in 2020. A modern economy requires a modern business system with high competitiveness.

 

It is most encouraging that the number of small enterprises (asset below VND5 billion) decreased from 83.4 percent in 2005 to 72 percent in 2008. While bigger enterprises (asset of VND5-20 billion) increased from 12.2 percent in 2005 to 20.5 percent in 2008 and enterprises with asset of VND20-100 billion also increased gradually.

 

State-owned enterprises (SOEs) decreased in number at both central and local levels from 2,908 to 1,256. By July 1, 2010, 1,000 SOEs had begun transforming into one-member Co., Ltd.

 

It is also most encouraging that Vietnamese entrepreneurs are giving up family and habitual management practices that failed to secure long-term business efficiency to adapt more advanced management methods.

Regarding the FDI sector, wholly foreign investment enterprises are increasing from 2,852 enterprises or 77.1 percent in 2005 to 5,405 enterprises or 82.6 percent in 2009. It shows that management, technology, capital and brands of FDI enterprises are more attractive.

And, how does VCCI assist businesses in restructuring?

In its capacity as a political-social-professional organization of entrepreneurs, a national organization of the business community, VCCI has the task of advising the Party and State on orientations and solutions for business development and implementation of business promotion and assistance.

 

The goal is to develop a business community capable of managing the economy with high competitiveness, nationalism, social responsibility, unity and active participation in global value chains, playing a decisive role in industrialization, modernization and international integration. By 2020, progress must be made in quality and business structure toward a high ratio of big and medium sized enterprises, with enterprises of regional and world standards.

 

To achieve this development strategy, together with the increase in size, quality must be heightened in newly established enterprises and management skill upgraded inexisting enterprises, especially in economic groups and large enterprises. Vinashin phenomenon and some State-owned economic groups have shown incompetence in strategic orientation and management of large and mufti-sector enterprises. It also shows that the increase in investment fails to upgrade enterprise management skill. Therefore, capacity building programmes for existing enterprises and start-up businesses are highly important and VCCI is doing its best to develop these, together with business ethic, social responsibility, environment protection and sustainable development.

 

With the permission of the government, VCCI has established the Business Council for Sustainable Development. One of the Council’s tasks is to advise the government on business orientation for sustainable development, including restructuring the economy and businesses.

 

VCCI has also implemented assistance programme and cooperation of business associations. As a result, associations have been established in main industries and 40 cities and provinces. VCCI will continue to assist the establishment of business associations, promote cooperation in business activities, labour relations, and tri-partite mechanisms to solve issues in labour relations and labour market development.