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Straits Times Article Describes Vietnam’s Hopes for the Biden Presidency

Straits Times Article Describes Vietnam’s Hopes for the Biden Presidency

The Straits Times recently published this article which captures the opinions of a few members of the Vietnamese government about Joe Biden’s recent election win.  Given the general anti-trade stance and phrenetic approach of the Trump administration to foreign relations, it is not surprising to see optimism in these opinions.  At Peregrine, we do not believe that Vietnam is guilty of systemic currency manipulation, but that devaluation of the Vietnam Dong is mostly a result of macroeconomic factors such as the US-China Trade War encouraging businesses to move operations and supply chain sources to Vietnam.  Time will tell, but it is our hope that the outgoing administration will not do anything drastic relating to tariffs or other penalties and that the incoming Biden administration will take a more rational and nuanced view to trade and international relations.


Intel Considers Expansion of Operations in Vietnam

Intel Considers Expansion of Operations in Vietnam

According to this article, Intel is considering an expansion to their $1B facility in Ho Chi Minh City. This news is especially poignant for me. At the same time I was working on the project that would eventually take me to Vietnam, I was also pursuing an MBA at the Carlson School of Business. One of the case studies in the program was a Harvard case about Intel deciding in which country to place a new assembly & test plant. The case had Intel evaluating China, India, Thailand, and Vietnam as potential sites. The case study was not only well constructed, but historically Intel chose Vietnam, the investment was so successful that they would triple the scale of the plant very quickly. As I was engaged in the same activity at my employer, and was already planning to recommend Vietnam, the case was one form of validation for me.


Here's a link to purchase the case: 
HBR Case Study


While I was looking for the Harvard Case, I came across an extensive review of the Intel investment published by Fulbright University Vietnam. The Fulbright paper, Intel Products Vietnam: 10-year Investment Impact Study Report 2006-2016, covers not only Intel’s outcomes but gets into extensive detail on the impact the investment had on Vietnam.  It’s a good read for anyone interested in investing or operating in Vietnam.

HBR – Asking for Solutions, but Listening to Problems

HBR – Asking for Solutions, but Listening to Problems

Great management and culture-building insights from a Harvard Business Review article called “The Problem With Saying Don’t Bring Me Problems, Bring Me Solutions.”  In fact, the insight is even more poignant when taken in a cross-cultural context.  Early in my career I had a series of managers who taught me to always operate to the “Doctrine of Completed Staff Work” and not bother the boss until, I had a complete recommendation backed with a solid rationale and some alternatives for review.  This can be efficient, and with the right employee it can help them learn confidence and independence.


As the article indicates, the downside to this style is that a manager runs the risk of driving a culture where the boss is not involved in the discussion of the problem and may miss problems or other important information.  The manager may also discourage employees who are still learning and trying to build confidence.  This second issue can be even more problematic in a cross-cultural or international context.  The usual cultural friction and uncertainty between a manager from one culture and an employee from another that has a higher power distance can render any useful discussion impossible. 


Like almost any management technique, solution orientation has its place in the toolbox.  However, managers and leaders, especially those operating in a cross-cultural context, need to determine which employees and at which time to make use of the technique.


Trade War Driving Exodus from China

Trade War Driving Exodus from China

The on-going trade war continues to drive manufacturers to seek markets outside of China.  The linked Tech spot article discusses Foxconn’s assertion that China’s time as “the world’s factory” has ended.  The article goes on to discuss not only the plans of Foxconn, but also details investments of some of Foxconn’s suppliers.

FDI in Vietnam remains very strong as a result of the trade war, but Vietnam won’t have the capacity to take all of it. The article mentions India, Brazil, and Mexico as other potential markets being evaluated. 

Link: https://www.techspot.com/news/86350-foxconn-china-can-no-longer-world-factory.html

New Draft Investment & Enterprise Laws for Vietnam

New Draft Investment & Enterprise Laws for Vietnam

In June the National Assembly of Vietnam passed new investment and enterprise laws which will go into effect on January 1, 2021.  Draft decrees have been released to the public which indicate potential wording,though it should be noted that final wording and content could change by January first.  I came across briefs on both law revisions published by Baker-McKenzie, and have summarized what seems most relevant below.

 

Investment Law

Link to Baker-McKenzie brief: https://insightplus.bakermckenzie.com/bm/mergers-acquisitions_5/vietnam-new-investment-law-and-draft-guiding-decree

 

The biggest change to the investment law is that Vietnam will apply controls on foreign investment only on industries specifically identified in their conditional and prohibited lists.  After this law is passed,businesses investing in industries not on the conditional or prohibited lists will be subject to the same requirements as domestic investors.  Such requirements may still include permits, licenses, certificates, etc.  The B-M brief includes the complete list of prohibited and conditional industries.

 

The investment law also includes new incentives for investors in high-tech sectors.  Again, these are detailed in B-M’s brief.

 

Enterprise Law

Link to Baker-McKenzie brief: https://insightplus.bakermckenzie.com/bm/mergers-acquisitions_5/vietnam-new-enterprise-law

 

The changes to the enterprise law seem less significant and fall in three broad categories (listed below).  More detail is provided in the B-M brief.

  • Support for digital signature & process, to make sure they stand on equal footing with paper processes.
  • Minor changes to governance structure for Joint Stock Companies.
  • Minor changes to classification of State-Owned Enterprises.

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