No short-term matter

Yoshiaki Ueda, professor at the University of Marketing and Distribution Sciences    and vice director of the Center for Vietnamese-Japanese Economic Exchange, discusses the Japanese way of doing business on the sidelines of an Exchange Session Connecting Japanese and Vietnamese businesses recently organized at the HCMC office of the Vietnam Chamber of Commerce and Industry.

 The Saigon Times Daily: Is it easy or difficult to do business with Japanese companies? Do Japanese companies have any special characteristics?

- Professor Yoshiaki Ueda: In general, Japanese are very careful. But to be able to draw conclusions about the Japanese personality in business, one must spend a long time getting to know them. Japanese people have a special characteristic in that they weigh things deeply when they do something, thinking very carefully and calculating for the future. That’s the most unique characteristic. In contrast, Koreans, for example, make decisions immediately when they want to do something.

What are Japanese companies unsatisfied with when doing business in Vietnam?

- When the two sides haven’t come to understand each other, then of course there will be some points of dissatisfaction. However, after having worked with each other for a longer period of time, the two will surely have a greater mutual understanding. In order to understand one another, each side must go through a process of learning about the culture of each other’s country. One thing about Vietnamese that Japanese companies don’t like is the Vietnamese tendency to consider only the short-term benefit and not see farther into the future. This is very different from Japanese people’s way.

It’s being said Japanese companies are withdrawing from China to invest in Vietnam. What are the reasons for this?

- Japanese companies usually choose to invest first in China, and the next place is Vietnam because it lies directly next to China. The first reason that Japanese enterprises that do business in China want to transfer to another location is because the cost of labor in China is rising fast and, as such, China is losing its competitiveness with regard to the labor costs. The second reason is China’s change in its policy toward Japanese enterprises (taxes are higher, for example).

China is also close to Russia and India. Why does Japan choose Vietnam, not Russia?

- Perhaps because Vietnam and Japan share some common things with regard to culture. Any Japanese would like Vietnam after just one trip. I’m no exception. The first time I came to Vietnam was in 1994, and since then I’ve come to Vietnam 60 or 70 times. This year alone I’ve been more than 10 times. Every time I have business in Laos or Cambodia, I always stop over in Vietnam. I have a lot of friends in Vietnam. In 1998, I stayed in Vietnam eight months to teach. I really like Vietnam.

Do Japanese enterprises come to Vietnam because of Vietnam’s inexpensive labor?

- I don’t think Vietnamese labor is cheap. When Vietnam’s economy grows bigger and stronger, wages will increase accordingly. And life in Vietnam is better than before, so Japanese companies will not be producing only cheap goods but will make goods compatible with the quality of life of modern Vietnamese people. If the only concern were a cheap source of labor, then Japanese businesses wouldn’t go to Vietnam because labor costs in Laos and Cambodia are even cheaper.

What sectors are Japanese enterprises tending to invest in these days?

- Japanese businesses in Vietnam will primarily invest in processed foods and production of consumer goods, with part being sold in Vietnam and the rest exported to Laos and Cambodia. Acecook is an example of a successful investment in Vietnam. The company’s revenue in Vietnam is greater than in Japan itself. In Japan, Acecook specializes in new products, but in Vietnam its products will be those compatible with the needs of Vietnamese people. Some products are made in Laos and Cambodia. Presently, Acecook specializes in processing packaged ramen noodles, but in the future the company will make products related to convenience foods.

Of course, a number of Japanese enterprises still invest in high tech sectors in Vietnam.

You said during the Exchange event that Japanese businesses are reforming. Can you delve deeper into what this reform involves?

- The Japanese population is aging by the day. Sources of high-quality Japanese human sources can’t meet the needs of business. For this reason, Japan is attracting international students from Vietnam, Korea and China. In the past, only big organizations such as Sony and Toyota would hire foreigners, but nowadays small businesses are also recruiting talented foreign students. This is a very prominent change.

Returning to the issue of commerce between Vietnamese and Japanese enterprises, are you optimistic about the future outlook?

- At this time, the Japanese government is pushing the transfer of new technology into Vietnam. The Japanese government will join with Japanese businesses in finding ways of getting new technology to Vietnam – for example, the high-speed train technology Shinkansen and nuclear power plants. The new policy provides that the government will carry out large projects together with private contractors to push forward investment in Vietnam. Of course, with the government’s encouragement, private enterprise will make stronger efforts to invest in Vietnam. Japanese companies are looking for suitable fields for investment in Vietnam. In general, I’m very optimistic about the outlook for Japanese-Vietnamese trade.

In your view, what difficulties is Vietnam facing in attracting investment from Japan?

- Currently, Thailand and Malaysia are Vietnam’s strongest opponents. The Vietnamese government is learning and gaining experience from other countries and is offering suitable solutions for the country’s present situation. I think that by 2015 Vietnam will be competing equally with these countries.

The Vietnamese government has come up with policies to stabilize the economy at the macro level and has created favorable conditions for business. In 2008, prices in Vietnam skyrocketed. Foreign investors were deeply concerned about the situation at that time, but Vietnam was able to overcome the difficulties. The Vietnamese government resolved the situation very well. In Japan, prices follow the rules of the market, and the government doesn’t intervene. Government regulations on the market in Vietnam have their pros and cons. But the government did a good job of handling the inflation situation at that time.

Do you have any advice for Vietnamese enterprises about doing business?

- First of all, a business owner must set an example, leading the way for others to follow. For example, in completing a task that requires five people, the company director must be among those five people. When the director participates in the work, then the employees will give their best effort. The director is not just a person who gives orders. Japanese businesses succeed because their leaders know and apply this practice.

Secondly, employees must all have the same understanding of criteria established by the company so that everyone can work together – general instructions or orders shouldn’t be given on an individual basis. If you only give orders to this person to do this task and that person to do that task, then everyone will be working only by order and not using their creativity to help develop the company as a team. It’s very important to develop each employee’s potential and strengths. In successful Japanese companies, each employee sees himself as a company owner – not just an employee. In Vietnam, the spirit and strengths of employees have not yet been developed.