|By Pham Hoang Hai - Executive director Italian Chamber of Commerce |
However, despite this, we should also be objective and say that this is not enough based on our potential – we believe the numbers could be up to three times as much.
There are several reasons. First, for the two decades leading up to the global economic crash in 2007, Italian companies had been focusing too much on traditional markets like the EU, North America, and Latin America.
When the financial crisis came, Italian companies had to find alternative markets such as the ASEAN, but it was too late for them since many other competitors from Europe and the United States were already there. Another reason may come from the Vietnamese side. The Vietnamese government’s policy on economic development still needs to be further improved.
From our professional point of view, if the Vietnamese government had focused on just a few key industries and pushed those for the last 30 years, the outcome of the economy could have been much different. The automotive sector and supporting industries are two of the most unsatisfying areas for not doing this.
The ASEAN economic area is now perhaps becoming one of the most important economic areas in the world. Like other ASEAN countries, Vietnam is going through a golden period too, economically speaking. This period will not be repeated again, and so if we do not learn lessons from the past, we will miss our train to the future.
The implementation of the EU-Vietnam Free Trade Agreement is expected to create a further increase in trade relations between Italy and Vietnam. After the agreement comes into effect, 65 per cent of import duties on European exports to Vietnam will be removed, so enterprises see this country as a destination to reap these advantages. Now, Italian investors are increasing their interest in many sectors.
Over the years, we have also witnessed Vietnam relentlessly focusing on improving its competitiveness and ease of doing business. The government is determined to reform institutions and administrative procedures to facilitate business activities.
Just like the saying “When in Rome, do as the Romans do”, one should understand Vietnamese culture and ways of life when in Vietnam. To be effective, a foreign manager in this country should lead by example and invest time in building relationships with his or her colleagues. Once relationships are strongly in place, then the company environment becomes like a family and people feel comfortable and ready to offer their best in terms of performance and contribute.
Besides this, the main problem for a foreign company is mainly choosing the right partner, this partner being a local co-investor, a client, an agent, a distributor, or a sub-contractor. A bad choice can cost a lot, not only in terms of money, but also in terms of energy, faith, and global strategy.
There are many criteria to choose the right partner, but some basic advice must be followed. Even partners that insist they know everything and promise to bring you “success” in the short term should be looked at with suspicion.
There are then partners that have huge financial abilities, but the foreign companies should always consider that behind visible assets there might be huge, invisible liabilities, bank debts, and more.
Ideal partners may be those that are full of successful projects, fully licensed, with financing already completed and with an implementation schedule for the short or medium term. But reality does not always work this way.
Nevertheless, there are excellent partners and very qualified ones across Vietnam. The game for a foreign company consists of checking and cross-checking major information, using the many official channels in the country, as well as those in both the public and the private sector. Human resources here are also good, even compared to other countries in Southeast Asia.
The legal, financial, and economic environment is improving every year. Vietnam enjoys also a level of political stability that many countries would like to have. As a result, any foreign country is welcome and gets its space here – but only if it respectfully follows some conditions.