Vietnam: Vietnam and Business Environment Essay

Submitted By zachtoll
Words: 1116
Pages: 5

The Socialist Republic of Vietnam, or more commonly known as simply Vietnam, rests on the Eastern shore of the Indochina Peninsula in South East Asia. Its boarders neighbor China to the North, and Laos and Cambodia to the West. The body of water on the Eastern shore is the South China Sea. This country has a rich culture and history, dating back to its independence from China in 938 ad. Their turbulent history has involved explosion of the French and conflict between the Northern and Southern halves, eventually leading to cold war-era conflict. Originally, the war started against France, then involved the United States after their backing of France. This ended with the fall of Saigon, and the South’s surrender. Today this communist run state is emerging from the shadows, and has bolstered an active emerging economy. The cultural environment involves religion, customs, and values of the people. In Vietnam these can become a barrier of entry for foreign or unfamiliar prospects. Understanding current economic struggles is also important when deliberating on whether to enter a market. This environment had seemed to be very promising, but has recently seen little success. Finally, analyzing the political environment may help cue in on Vietnams current standing with foreign powers, and overall governmental philosophies. The cultural, economic, and political environments are three factors that directly affect Vietnams business environment. Vietnamese culture is deeply engrained in everyday life, as well as the business environment, much like other Asian countries. It is important to understand and respect their culture, in order to build a relationship, before you begin to do business. Important values come from teachings of Confucianism, and the idea of “face” Vietnam is a highly collectivist community, where the needs of individuals are placed below those of the community. This can affect the business environment in many different ways. The business culture is seen to be quite hierarchical, where senior partners have the greatest influence. Younger employees are to respect their elders, and will not correct them even if they know they are wrong. This also ties into the concept of “face”. Vietnamese strongly encourage saving face, as Westerns would protect their reputations. Saving face is also seen in the business environment. When being pushed into a corner, Vietnamese will avoid confrontation in order to not upset another party. They will often either tell others what they want to hear, or not respond at all. This often leads to an abrupt end to a business partnership, or no repeat business. In order to do business, and affectively and penetrate the Vietnamese business market these traditions and values must be followed. Even with the Communists victory over the South in 1975, their capitalist ideals still remained. According to the text in, Japan and the Pacific Rim, “The Vietnamese government began to liberalize the economy in the mid-1980s”(Collinwood, 2011). This would eventually lead to Bill Clinton’s repeal of the economic embargo of Vietnam. Until recently, Vietnam has had the right senior to allow for their economy to thrive. The Vietnamese are infatuated with foreign products, and operate a market focused heavily on imports. Vietnam offers a large, natural resource-rich, agricultural center, with an ever growing literacy rate of their youthful population. These are all benefits that have helped the economy to survive and flourish in the past, though today the economy is going encountering many struggles. This started amongst the global financial crisis in 2008. According to Cox, “The global financial crisis dented the world trade and slowed foreign capital flows”(Cox, 2012). These failures are crucial keys to why Vietnam’s economy is currently struggling. Vietnamese banks have since stepped in to ensure the flow of money, offering loans and credits. To add to the downfalls, most capital flowing in to save…