NHỮNG THÁCH THỨC của DOANH NGHIỆP VIỆT NAM KHI bước vào môi TRƯỜNG KINH DOANH QUỐC tế t

ENTERING INTERNANTIONAL BUSINESS ENVIRONMENT
- VIETNAMESE ENTERPRISES‘S CHALLENGES
CHANGING AND FACING
INTRODUCTION
By way of industrialization and modernization, international economic integration has
brought to Vietnam many benefits and achievements in national construction and
development of the country. Vietnamese Party and the Goverment have been agreed in
opinion through the parliamentary meetings, especially on the meeting of the
Parliament No XI, we prioritized to discuss some programmes on deep integration
process for international economy. In fact, after Vietnam joined WTO, our Party and
the government always create favorable conditions for Vietnamese enterprises
developing internal strength, boost production, increase exports and ensure fair
competition in the region. To achieve this ojective, the Vietnamese enterprises need to
invest properly and fully human resources, financial ability, technological innovation,
and strengthen relationships with partners and customers in domestic and abroad,
sustainable development strategies, increase management ability as well as build
positions in the market, or improve brand positioning to increase the competitiveness
of Vietnamese enterprises in domestic and overseas market. These factors help
businesses more actively in finding market and market share both in our local market
as well as in international areas. From these advantages, we will develop in a most
effective way, to avoid the risk of rejection because we don’t meet social demands, as
well as can not exist under the rules of the competition. In addition to the development
and the strength, the enterprises will have many opportunities to reach out overseas
projects, the opportunity to work with the investment-oriented project in a effective
way. With these advantages, we are very successful enterprises in the Vietnamese
market, under the Board of Director’s directions, our company has decided to expand


its business on a global platform – face with the international competitive business
encironment. To make investment to achieve high efficiency, we have studied through
advisory channels, sources of information, calculation and evaluation business

efficiency, using some analysings as following:

I. Analysis of differences between the business environment in
Vietnam and the global business environment:
The difference between the business environment in Vietnam and global business
environments mainly occur due to cultural differences:
Vietnam is a country with a culture of Collectivism and Masculinity, so the power
distance gap is big, has tendency to avoid uncertainty and deal with time in a circle,
spiral way. Therefore, the business environment in Vietnam will be heavily influenced
by this culture: Because collectivism attitude, all business decisions will be decided by
the collective. This has the advantage that this decision will be made very realistic
because it was deliberate by the collective, avoiding subjective factors when it is
determined by a person. However, in a global business environment, a decision made
too late will lose business opportunities due to competition, the competitors can catch
our chances. Collectivism could make members in the group dependently, they do not
willing to think or explore new things todevelop their personal creativity, which
makes Vietnam Business becomes identity and completely unable to compete on the
world market. In addition, collectivism can also cause conflicts of rights (wages
divided the same in Vietnam Business whether members can devote as much or as
little). And that means motivation and personal development is suppressed.
Vietnamese culture is masculinity: men are considered more important than women,
by chance we suffer loss of talented human resources from women because women
are unnoticed and don’t have advanced training while there are talents are female. In
Vietnam, there are many successful business woman like Ms. Cao Thi Ngoc Dung,


chairman of the Board of stones Phu Nhuan Jewelry Company, Ms. Nguyen Thi Phuc
Lam, General Director of Bao Viet Group, Mai Kieu Lien - Chairman and CEO
Vinamilk (VNM), Nguyen Thi Mai Thanh, Chairman of Refrigeration Electrical
Engineering (REE), etc. We think the number of successful business woman is much

more if Vietnamese erase the concept of woman contempt
Vietnam is also a country with a large power distance, all business decisions will be
made by the highest authority in the enterprise, so the initiative or idead will be
limited in the organization. This will also reduce competitiveness when Vietnam
entered the business in the global environment.
Since Vietnam (as well as in some other Asian countries) have culturetime multi line
(polychrnic) punctuality is not respected, but also the concept of "The late one was the
most important ". This concept should be revised thoroughly if we want to enter
global business environment, especially when we corporate with partners who has the
concept of linear time (monochromic) that the concept of time is money,they don’t
satisfied with the late.
In addition to cultural differences, Vietnamese Business must change if you want to
join the global business market, the recruitment of Vietnamese enterprises must also
change: not hiring and has priority for members in a family, relatives, acquaintance.
On opposite, we have to prioritize ability factor as the top one, so that only qualified
personnel can really help businesses stand and win the harsh international business
environment.

II. Vietnam Business changes need to be made to be able to compete
globally:
Table published by the year 2011-2012 of the World Economic Forum (WEF), the
indicator of global competitiveness, including 12 key indicators:
3 Competitive factors

12 indicators and
ranking (142
countries)

Vietnam's ranking
(2011-2012)

Basically requirements

1. Orgnaization
(87/142)
2. Infrustructure
(90/142)
3. Macro Economic
Environment (65/142)
4. Health care and
primary
education(73/142)

76/142

Effective improvements

5. Eductation and
university education
(103/142)

66/142

6. Goods market
effective (75/142)
7. Labour market
effective (46/142)
8. Financial market
develpment (73/142)

9. Ready for technology
(79/142)
10. Scale of the
market(33/142)
Creative factors and
sophisticated

11. Sophisticated in
bussiness (87/142)
12. Innovation (66/142)

75/142

If we compare 2011-2012 with 2010-2011, Vietnam has reduced its ranking to 6
levels. This proves that Vietnam should quickly change a number of indicators to be
able to increase capacity in the global competition.
As reported by the World Economic Forum 2011-2012, here are 14 factors that
Vietnam needs to improve to have a chance to compete globally:
1. Inflation
2. Finance approach ability


3. Unstable Policy
4. Foreign exchange regulations
5. Infrastructure does not meet the requirements
6. Labor force is not well trained
7. Tax provisions
8. Corruption
9. Poor professional ethics
10. Government Bureaucracy

11. Government's policy is not stable
12. Tax
13. Restrictions on labor law
14. Poor public health-care
In our view, for Vietnam to enhance global competitiveness, the Government must
make the following points:
- Strengthen the control of inflation immediately
- To promote the export than import (export-import balance)
- Good management of loan capital, reduced interest rates to 1 figure, increasing bank
loan accessibility
- Promote the development of infrastructure
- Privatization of the business sector
- Improving the education system, particularly English language training
In sumary, the Vietnamese government should think thoroughly: State management,
private business, the global competitiveness of Vietnam will improve quickly.


III. Challenges in the international environment that Vietnam does
not have:
Here are four major challenges that Vietnam Business faces when joining the global
business environment:

1. Competition:
More fierce competition will take place, with more "competitors"on broader and
deeper aspects

2. The benefit distribution
All over the world the, from globalization, benefit distributions are not equal.
Countries with low economic development have benefit less than development
countries. In each country, the benefit distribution is also unequal. A part of the

population have benefit less than others, even with the negative impact of
globalization; bankrupt a business division and increased risk of unemployment,
inequality will be more powerful. To avoid this situation, we need to have a welfare
policy and social security right; must thoroughly understand and implement good
policy of the Party: "Economic growth must couple with poverty reduction, make
improvement and social justice at every step of development."

3. Interdependent between countries:
While there is international economic integration in a world of globalization, the interdependence between countries will increase. In terms of national resources is limited,
incomplete legal system, lack of experience in market economy operations, this is a
big difficult towards these countries

4. New problems arise:
International economic integration poses new problems in environmental protection,
protection of national security, the maintenance of cultural identity and tradition of the


people, against the pragmatic lifestyle, working for money as well as running, follow
up money all the time

IV. We - Vietnam Enterprises – what should we do to overcome these
challenges?
A. Seek for the assistance of the Government on policies, development
direction of the economy:
1. To further improve the legal framework, administrative procedures reform and
fiscal policy, so that business investment environment is equality, transparency,
stability and ventilation
- On completion of the legal framework: The general law continues to improve the
economic and legal framework in particular in the direction that all citizens and
organizations are entitled to do what the law does not prohibit. The State ensures the

frame legal activity which is an essential requirement. In the next 5 years, the
economy entered the period of integration into the world economy and the region, we
will have implementation of bilateral and multilateral commitments on economic,
creating a business environm that is equity, transparency, stability, ventilation system
on the basis of full legal stability. These factors will create favorable conditions for
business development in both quantity and quality, to attract more are all sources of
capital for investment development.
- To promote administrative reform: Although it has achieved some initial success in
administrative reform, but in general administrative work in our country still exist
many problems, the capacity of the state apparatus still is weak, slow changes, as
shown in the following aspects such as: awareness of the state in general is unequal
transition between the central and local levels, between relevant agencies at the same
level, and slow than the change of legal system compared with rich, dynamic
environment in recent years; psychological and working attitudes. Working methods
and management tools of the relevant agencies do not have change significationly to
fit the procedure, the new policy. Scientific, professional working in a market


economy of state agencies is still low. Those parts and necessary tools for the
implementation of the Enterprise Law in particular, support and business development
do not to build, consolidate and strengthen as prescribed.
- To promote the study and using some methods to reduce the business cost, so that
operation cost is the most competitive compared with other countries in the region
such as regularly organized and maintained online discussion, from these activities
enterprises can now receive business consultation, submission, tax implementation
procedures and collected primary information as quickly and cheaply as possible;
reduce procedures for business registration through the setting a nationwide
networked system of business registration
- Fiscal policy: Adjust appropriately tax system to encourage business start-ups, to
encourage small business development and job creation. At the same time, the

implementation of the reform of accounting, statistics in the direction of
simplification, encourage enterprises to declare and pay tax.
Amend the provisions of the Value Added Tax, Import and Export Tax in the direction
of determining the transparent, clear standards in accordance with the bilateral and
multilateral agreements which Vietnam has signed and regulations principles of
integration.
2. Implementation of appropriate policies to improve the shortage of the production,
and environmental protection: While many state enterprises are allocated land but they
don’t use in an efficient way – there is fallow land or use under other purposes, the
Company (including mainly private-sector enterprises) face many difficulties in
finding business premises with huge costs. Even if enterprises have land for the
production, they still cost a lot of money and time the care about all the necessary
procedures to obtain the land use right certificate to be able to mortgage. This has
contributed to the investment restrictions which used to be have limited of the
enterprise.
In order to solve the problem in terms of production and business enterprises, the 2003
Land Law and the guidance of the Government's Decree No. 180/2004/ND-CP,


181/2004/ND-CP, 188 / 2004/ND-CP ..., has defined a number of specific issues. But
so far, , to create conditions for enterprises in accessing land and can use land use
rights as collateral, mortgage loans from credit institutions, it is impossible because
the implementation of the provisions of the 2003 Land Law and Decree guiding is
ongoing and has difficulty
3. Research and promulgate policies to encourage development funds for Enterprise,
enhancing ability to access credit capital for operation
While commercial banks have said that they do not lack the capital to lend, but there
are so many businesses can not build business plan to convince the bank loan.
Meanwhile, businesses owners will argue that they are very difficult to access credit
loans. The problem here is that supply and demand is not met and the State's role is

support to create conditions for the supply and demand for money that meet
requirements. More details are as following:
On the Enterprise, state support for training so that these enterprises have the ability to
set up a feasible business plan to persuade banks to lend; encourage businesses in the
same industries contribute capital to set up funds for helping each other ...
On the banking side, the state should study and provide preferential policy, ensuring
that profits obtained from commercial banks are interest paid by corporate customers.
4. Promote dissemination of information, technical and technological information to
enterprises, improving the capacity of enterprises to identify, select and adapt
technologies.
Lacking of information is one of the major barriers to the development and
enhancement the competitiveness of the Company. So, in the next plan period, we
need to focus all necessary resources for setting up a system to collect and process
information to support the business.
Besides, it is necessary to encourage the cooperation and technology sharing between
the enterprises, develop effective research programs that can be apply in commerce,


encourage the development of joint model between research institutes, universities,
technical schools now.
5. Encourage businesses to participate in the affiliate industry at all levels and support
the development of business associations.
In general, the world of affiliate business is always mentioned in the form of business
association, link beam (cluster) ... However, in Vietnam, both forms of development
only at a limited level and efficiency is not high. Therefore, there should be more
appropriate policies to encourage the development of associations in the direction of
training support staff associations; ministries, to create favorable conditions for the
opportunity to participate in the activities in the sectors of management in accordance
with the law, consult organizations to improve the management regulations state
sectors; help develop industrial zones weakness in the auxiliary industry; encourage

the development of links between enterprises and research organizations and
educational high level of development through appropriate policy support.
6. Aid in key areas to enhance the competitiveness of some sectors in which Vietnam
has advantages.
According to the experience of many countries, because all governments have limited
budgets, while the support demand from the Company in general and business in
particular is very large and generally beyond the capacity of Government, in every
certain period, every country selected a number of areas in which his country has the
advantage to focus on developing. In Vietnam, in very limited financial conditions for
Business support activities, the more we must be consistent with the key principles
help, aid can only be done with a few business, but make sure that after receiving the
aid, the business may be able to compete. Business support activities should avoid
dividing equally because each firm receives assistance will not solve the difficulties of
the business as we did before.
7. Encourage development of services market which has oriented from market
economy, separate directly provide services functions out of the state management
functions


To achieve business development goals, we should take appropriate steps to encourage
the development of market business development services (both on the supply side,
that is encouraging the development of businesses and individuals operating in the
field of consulting, training ... and the demand side, for example: giving businesses
and individuals in the society have the habit of using the consulting services); separate
steply provide service functions out of the state management function. So, state
agencies will be completely focused on policy development and implementation role
to promote, support, monitor and manage the quality of services provided in the
market.
8. Develop corporate culture, business culture, to encourage business start-ups.
To evoke entrepreneurial spirit, corporate culture development, it is necessary to

implement advocacy, education, common sense business, wills and business
enrichment to all subjects, especially start to pilot the introduction of business lessons
into the curriculum in schools, universities and vocational training; accelerate
deployment training support business start-ups.
When the market economy grows, require businesses, entrepreneurs have to be ethical
in business, understanding of the law, have the sense of law-abiding, responsible
society, etc.All these things are considered business culture. In Vietnam today, beside
some companies has understanding of the law but still intentional violations, there are
still business owners do not have knowledge of the law, so they inadvertently violate
the law in the course of operation. Therefore, the development of business culture is
an aspect that should be much interest in the development of Small and Medium
Enterprises period.
9. Strengthen coordination between Supporting Business Development Orgnaization
In order to improve the efficiency of the Business development activities, the
Government will improve coordination of implementation activities support Business
development through strengthening the role of the direction of the Council for
Promotion of Corporate Development. We should allocate responsibilities between
ministries and between central and local agencies in the development of Enterprise


and the coordination between these agencies in the implementation of assigned tasks;
stronger decentralization to local authorities in implementing the Business
development activities; allocated to business associations, consulting organizations,
training together with implementing assistance programs support for development

B- Company ourselves must find solutions to improve our own
competitiveness when entering the international market:
In the context of globalization, especially when Vietnam is a member of the World
Trade Organization, Vietnamese businesses face new competitors (transnational
companies, multinational prospective financial resources, technology, experience and

competitiveness), competition in the new condition (global market with strict
principles of commercial institutions and international law), Business Vietnamese
enterprises need quickly change to meet the following:
1. Raise the level of education, knowledge of the socio-economic, cultural, legal ... for
business owners, managers and employees in the enterprise: there is still 43.3% of
business owners that has education level less than high school, only 2.99% have
master's degrees or higher. Therefore, business owners, directors, managers businesses
and workers need to equip education in bachelor and basic knowledge about the socioeconomic, cultural, legal issues.
2. The business owners, directors and managers strengthen the ability of business
administration, strategic management. In all conditions, entrepreneurs need regularly
updated new knowledge, the skills required (competitive skills in management,
business leadership skills, change management skills, presentation skills, negotiation
and communication skills, etc.) in order to be competitive on the market and access to
the knowledge economy. For long-term competitive and can confidently step into the
knowledge economy, enterprises need to develop a strategy for sustainable
development. In particular, special emphasis on competitive strategy and strategic
skills such as: Strategic Management, risk management, and sensitivity in
management, business analysis, forecasting and orientation development strategy


3. Currently the majority of Vietnamese enterprises are small-scale, small capital,
education, business knowledge, understanding of the law (especially international
law) is not high, the level of skilled workers low ... In this condition, to implement
competitive strategies, it is necessary to corporate and implement the guideline links
in order to improve product quality, enhance competitiveness in the market. The
association and cooperation is not allowed to add up the total number of enterprises,
which is to create multiple power groups, corporations and economic production of
one (or several) most products and with the implementation of brand strategy,
promotion and advertise products on the market.
4. Enhancing the support of the government and state agencies that manage capital,

institutions, policies, laws, trade promotion, education and training, advice on
equipment and modern technology ... for businesses. At the same time, to further
strengthen the role of associations, societies, clubs directors and professional
organizations, for the development of business enterprises.
5. Build corporate culture: Culture plays an important role in the development, both
the goal and driving force of socio-economic development. Corporate culture, said
briefly "enriched directed", that mean getting rich in a culture eay: Enrich yourself,
enrich the businesses, social enrichment and for the country. Intellectual wealth, the
wealth and creative features are the social values that every business, every business
must have. Therefore, corporate culture construction creates a healthy cultural
environment, is always a positive driving force for creativity and competitiveness of
enterprises.

CONCLUSION
In the current period, it is a big threat to the world economy, because there are crisis of
the world economy, the debt crisis in the European countries, political instability as
well as the risk of war outbreak from the country which has the sovereignty and
territorial disputes, etc. So the investment in improving the competitiveness of
Vietnamese enterprises in international business is essential and urgent issues. This
has changed these factors that could decide the growth and development of the


economy in the country.

But especially in the context of the current economic

difficulties, our business whether actually very successful in the domestic market, the
decision of foreign investment, we also need to be prepared, it is necessary to qualify
and strong competitiveness because this is really a very fierce competitive
environment. Especially the legal system in our country we make investment as well

as other laws may not be favorable for business. However, we think the business
environment whether favorable or difficult, with insights and enough resources
(human, financial, and material resources, competitiveness, etc.) together with the
right investment strategy, our business will achieve business and investment in the
domestic market as well as internationally. This will help our business stable growth
and sustainable development, contributing to the development of Vietnamese brand
worldwide.