MBA Journal: Doing Business in VietnamRusmir Musić
My first impression on landing in Vietnam was, "Oh wow, Ho Chi Minh City looks exactly like Sarajevo." It is a testament to the proliferation of 1970s Soviet architecture that I could fly halfway around the world and feel as if I had arrived back in my own home country of Bosnia, another beneficiary of Soviet-style economic planning. I was visiting Vietnam (and subsequently Cambodia) on a Global Residency trip with my MBA program at Georgetown University's McDonough School of Business (McDonough Full-Time MBA Profile). Although I'd still need to take classes on our return to campus, this trip would be a culmination of my learning in global business, concluding in a consulting presentation to a Vietnamese client for whom my team and I created a global branding strategy and regional entry plan.
Part of the reason I chose Vietnam for global residency was I wanted a culture completely alien to my own experiences. Although I had to adjust to a brand-new world when I first moved to the U.S. at 17 after leaving Bosnia, I still saw Europe and North America as essentially sharing the same worldview. It was, therefore, incredibly surprising to see so many similarities—the architecture, bargaining at the city market, the narrow roads resulting in major traffic jams—between Vietnam and Bosnia.
Then things got more interesting. "I got the best recommendation for a tailor," my friend Erica said over a couple of Vietnam's finest $1 beers. "This crazy ex-pat war vet saved us when our Mekong cruise boat dropped us off in the middle of nowhere after we refused to pay them an extra $200. Well, he says you need to go to this lady in the stall in the city market and buy your fabrics. She then gives you the name and address of the best tailor in town. If you tell him that Erica sent you, he'll give you a really good price. I already bought four dresses from him, and he loves me."
From Extortion to Astrology
Erica's story encapsulates business in Vietnam in so many ways. Although the economic engine is moving the country toward more Western standards at supersonic speeds, there are still many vestiges of lawlessness, such as the boat extortion described above. Most deals are conducted on the basis of relationships; if the two parties don't already know each other, introductions are needed through social situations before sitting down for business matters. Even self-proclaimed nonreligious individuals will often consult astrologers to find out whether a deal is made in auspicious circumstances. Finally, just about everything is open to negotiation. While I always considered my mother to be the family's true expert on price negotiations in the market (she has the patience to look through all the options and a willingness to walk away, both of which I lack), by the end of my trip I was slashing prices on silk scarves and souvenirs down to only one-third of the originally stated price.
The Global Residency brought theory to life. It is one thing to read how a country can manage its currency reserves to set monetary policy and quite another to observe the Vietnamese government's efforts to promote a strong dong clash with the general dollarization of the economy, or to contrast this situation with Cambodia, where ATMs dispense dollars and the local currency is used only as change. Although Georgetown's education pays a lot of attention to public policy, it was still impressive to hear from our panelists about the Vietnamese parliament's preoccupation with some areas of regulation and complete disregard for others. While the Chinese government can relocate a neighborhood to create a highway, Vietnamese culture's respect for land ownership deprived the government of eminent domain rights, resulting in overcrowded roads where speed limits rarely exceed 30 miles per hour. While my global marketing professors lectured about adapting the product to regional needs, it's nonetheless nothing short of funny hearing that KFC is considered a premium product because the American prices are so much higher than Vietnamese price points.
Of course, the real impact of the visit was in our consulting project. Global Residency is a requirement for graduation. After we selected a country, the faculty and administration looked for consulting projects with companies that needed external help. Some were multinational, such as Pepsi and Citibank, while others were companies looking to expand abroad, and some were just increasing their in-country footprint. After each team was assigned a project, we continued to refine our understanding of the client's problems within the industry and regional context while preparing the presentation we would deliver to the company's chief executive or country manager while on residency.
Image of a "Hip Traveler"
During the global residency, my team worked with Vietnam Fashion Corporation (think Vietnam's GAP). Already the best-known clothing retailer in Vietnam, VFC has expanded into some parts of Asia and Africa and has set its sights on becoming a global brand. Our team's research into global branding strategies in the digital age unearthed new theories of the "consumer decision journey," where brands must interact with consumers to capture their loyalty. We developed a concept of a "hip traveler" that VFC could use to create its global myth, a hallmark of international brands that help create a global identity. We cautioned the client not simply to replicate its existing business plan, but to tailor the strategy to regional needs and market saturation. Finally, we conducted primary market research through focus groups, concept surveys, and deep interviews to understand North American consumers' willingness to buy VFC's product, given the highly competitive market.
The team was excited that the presentation was received well by the client. Our primary contact, the chief marketer, would occasionally get up in the middle of the presentation and translate our slides, to make sure her marketing and design team understood all the implications of our recommendations. Through our dialogue, we tried to show that the frameworks we developed could help them rethink their strategies in a new light.
The final seal of approval came when the client team invited us to an eight-course meal in a private dining room of a fancy restaurant and then invited us to go clubbing the following night. That's the fun part of doing business in Vietnam.