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Copyright © 1999-2014 Vietnam Venture Group, Inc. All rights reserved.    December 23, 1997

Lessons To Learn
By Kent Sears

Vung Tau-based business consultant Kent Sears suggests that foreign investors, and those  who would consult with them, should both learn from the problems of the past.

Copyright 1997 Vietnam Economic Times. Reprinted with kind permission from the Vietnam Economic Times (VET), that reserves all its original rights. 
This article was first published in Issue 46, December 1997.  V V G has edited the format only.

Nearly [four] years have passed since the American trade embargo against Vietnam was lifted. Today, results being posted on foreign business scoreboards, especially for Americans, are in many instances downright disappointing.  Some are viewed as flat out failures

Tales of woe circulate in the watering holes frequented by foreigners, with vivid accounts of projects delayed, goals not attained, scuttled schedules and busted budgets. Clearly there are lessons to be learned from the past three years.

In mid- l997 I participated in an information gathering exercise conducted by a major American corporation which was seriously considering entering the Vietnam market. As part of this effort, the client sent an executive out from the company’s US headquarters for a short tour of Vietnam during which the Executive interviewed 11 senior expatriate managers with verifiable successful Vietnam experience.

Use Your Time Correctly. In the interviews, it became apparent that all these managers believed that it took at least three years here before they felt they could actually make things happen with even the slightest degree of predictability. It takes three years, they said, to gain the necessary knowledge of local conditions, to build-up trust and to develop the right kind of relationships.

Those relationships are important. Foreigners tend to put a lot of emphasis on spending their precious time dealing with and negotiating the more formal legal aspects of their Vietnam business ventures instead of spending more time on the really productive aspects such as making friends, building relationships and getting to know how things actually happen.

Key Points to Remember.  Apart from that and the ubiquitous lack of reliable information in Vietnam, I would say that new foreign investors coming into Vietnam should never forget the following:

The Investment Fund Experience.   Perhaps nothing illustrates foreign failings in Vietnam more than the poor performance turned in by most of the investment funds. Since the funds came in early with plenty of ready cash, they could have staked out a profitable position. In fact, some have managed to achieved just the opposite, with at least one throwing in the towel. I would argue that some of their problems were painfully predictable.

Some of the funds employed people with little or no business experience either in investment banking or other relevant fields,. and no experience in Vietnam. They were then saddled with investment criteria developed elsewhere by people who have never set foot in Vietnam. Given these circumstances, the problems are not so surprising. It would be wrong to blame Vietnam, or the Vietnamese.

The Best Use of Agents.  Potential new investors should also not underestimate the importance in Vietnam of agents, advisors, consultants and other intermediaries. Many companies simply refuse to countenance the idea, relying instead on [their own in-house] representatives on the ground. But it's important to understand that intermediaries have always been valued in Vietnamese society, which traditionally stresses harmony in inter-personal relationships

The Vietnamese tend to equate directness with dis-courteousness and consider subtlety a more pleasant norm of approach Intermediaries have traditionally been used for all affairs of consequence, including arranging marriages. Vietnamese are comfortable using proxies for a variety of reasons, not the least of which is status.

The choice of a particularly astute, influential or powerful mediator reflects favorably on the principal. In addition, this method of conducting business also eliminates the possibility of someone having to risk losing face by being confronted with a question he or she is not prepared, for whatever reason, to answer

I find it astonishing that foreigners often assume they are capable or coming to the country and conducting effective face-to-face negotiations with the Vietnamese, when in fact the Vietnamese themselves do not deal directly with one another.

And for those already here, I argue that we shouldn't lose sight of the long-term objectives, and should focus on the countries three most positive assets: the people, the resources and its location.

For those people with perseverance and patience, the future looks bright.

Kent Sears of Vietnam Energy Recover, (Inc) USA, works in Vietnam as a senior advisor and consultant to a variety of international business, governmental and other organizations, and has 14 years experience in Vietnam. 

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