What We Have Seen Through Human Resource Development in Vietnam (Must Read for Japanese Companies Investing Internationally)

What Japanese companies in Vietnam are having trouble with now

When Japanese companies in Vietnam build their supply chain, it is not easy to find local companies with stable quality and small but shining new suppliers from scratch by themselves. It is not easy to find “local companies with stable quality” and “small, shining new suppliers” by themselves.

In Vietnam to begin with, 

・Underdeveloped supporting industries (midstream industries)
・Vietnam relies heavily on imports for procurement of raw materials and materials (upstream industries)

and

・there are no industrial support organizations for Vietnamese SMEs in supporting industries in the country,
・Many local companies do not have a website, and even if they do, you can’t get a sense of their level of expertise until you actually work with them. 

This is one of the challenges for Japanese companies in Vietnam. As a result, although they have gone to the trouble of entering the Vietnamese market, they are forced to rely on imports from Japan for raw material procurement and tend to rely on a few local companies that have done business with Japanese companies in the past or known local Japanese companies for processing.
The number of Japanese companies (especially small and medium enterprises) that can enjoy the expected dynamic business development (cost advantages) is still very small.

METI-KANSAI’s Trial – Aiming for a Form that Benefits Both Japan and Vietnam

Even under such circumstances, the number of Japanese companies, especially from the Kansai region, entering the Vietnamese market is still very active.

• Many young and talented people
• Low employment costs
• Rich in resources
• GDP growth rate is several times that of Japan
• Market size of over 95 million people
• The country is pro-Japanese and Japanese language education is well developed.
• The food is good and the cost of living is low.

If so, it is no less attractive than Thailand and Indonesia, which are always compared as candidates for expansion.

METI-KANSAI (Kansai Bureau of Economy, Trade and Industry) is promoting a project to train coordinators who will serve as liaisons between Japanese companies in the supporting industries in Vietnam and Japanese companies that have set up operations in Vietnam. 

The coordinators selected were current employees from various agencies of the local government. (One private sector manager is also a member.) This time, we provided training and guidance to the 11 coordinators. The main roles expected of her/them are,

・Ensure that local Japanese firms have access to Vietnamese firms’ basic technology and level information.
・Create opportunities for local Japanese and Vietnamese companies to meet.
・As a result, we will be able to establish a supply chain in Vietnam with the same level of quality as in Japan. 

It is called.

As mentioned above, there are no industrial support organizations for SMEs in Vietnam, and the support started from the perspective of “What is a coordinator who supports SMEs and serves as a bridge between supporting industries? The support was provided from the perspective of “What is a coordinator who supports SMEs, bridging the gap between supporting industries?

The details of the event are described below, but one of the immediate outcomes was “creating a place for Japanese and local companies to meet” was realized at the first Business Matching Meeting in Dong Nai (October 23, 2019).

Eleven coordinators and METI-KANSAI worked together to plan, prepare, attract, and operate the event. 

The event was also covered by local media.
Click here for more details in Japanese

After the event, the participating Japanese companies offered encouragement.

I hope the event will be continued,” “This is a rare opportunity to meet local companies of all levels, and I have been waiting for it for a long time,” “I hope there will be even more exhibitors next time.

The 11 new coordinators, who were the first in Vietnam, are a little relieved that they were able to contribute as a bridge between Japanese and Vietnamese companies.

• Those who worked late into the night day after day in preparation for the business meeting.
• The person who made numerous final confirmation calls to Vietnamese exhibitors and struggled to minimize the number of same-day changes (so-called “no-shows,” or cancellations).
• Those who were in the same promotion examinations.
• (Administrative person with child care) who attended the meeting while receiving a call from the kindergarten.
• (administrative person with a very senior position) who steadily moved the agenda forward while signing the documents brought by his subordinates one after the other.

The new coordinators were committed to the success of the business meetings, first of all, to create opportunities for Japanese and local companies to meet, and secondly, to do everything possible to make the meetings a success.

What is the “support” of government for small and medium-sized enterprises in Vietnam?

By the way, what exactly do you mean by “instructing administrative personnel (and foreign nationals) who have no experience in assisting small and medium enterprises”?

Since there was not much time this time, we used on-the-job training, which involved both classroom learning and practice at the same time, to first have the participants practice as they wanted and then make additional modifications as needed.

Specifically, the new coordinators accompanied the new coordinators on their visits to 10 to 20 local companies, including (but not limited to) the following

Through 1-2 hour interviews with visiting companies, 

• Business condition of the company
• Main Customers
• Future Sales Projections
• Strengths and Weaknesses
• Capital Investment
• Employee Training
• The Personality of the Manager

We will highlight such things as

During the tour of the factory by the management, the coordinators were busy gathering information and testing hypotheses they had formulated in advance, asking questions while looking at the machines, and taking notes and photos while listening.

The coordinator prepares for the content of each interview, but there are some items that do not come up immediately unless the coordinator has a lot of experience in corporate support, hmm? What does that mean? If you need to dig deeper, we will supplement the information onsite as needed.

For example, 

• What is the ratio of importing countries for raw materials?
• Do you have an in-house QA office (quality control room)?
• If not, how are quality inspections conducted?
• How many MOQ’s do you want to start with?
• Can you also supply molds?
• The number of transactions with Japanese companies is as follows
• The results with non-Japanese and foreign companies are
• The continuation rate after that is
• What was the cause of the non-continuation?
• Number of Employees
• To what extent are education and information sharing structured?
• Efforts to meet deadlines
• Frequency of progress reports to customers
• Will you work on exports in the future?
• How did you develop an international clientele if you were already working on it?
• Reasons to invest in equipment / Reasons not to invest now
• What is the previous occupation of the manager (if it cannot be determined by the history of the company)?

Etc.

Of course, the development of the interview will vary from company to company, especially depending on the content of the representative’s story.

• Not just one round trip of Q → ← A
• Not mere confirmation of an event.
• Don’t bother asking what’s on the website.
• To get to the background of how it happened and the thoughts of the management.
• Until we can see the future image of that corporate image.

We will listen to you.

Then, at the end of the interview, we ask the managers if they have any problems. We find that the problems of managers in all countries are almost the same, for example, 

• New development is difficult.
• Inquiries rely on word of mouth.
• severe price pressure.
• The website is not being used properly.
• I can’t get around to training my employees.
• Even if you train them, they leave the workforce quickly.
• No right hand man, no nurturing.
• Financing is not easy.

On the other hand, 

• I can’t read the wave of orders.
• I can’t fulfill the order.
• We are looking for a site for a factory, but we can’t find a good one fast enough.
• We are aggressively investing in equipment before the order comes in.
• I want to sell more and make it bigger.
• I’m too busy to do what I want to do.
• Delivering to Japanese companies is not easy, but it leads to the company’s growth.

We were all inspired by the presence of Vietnamese midstream companies that are gaining momentum, such as

Through these company visits and careful interviews, we will accumulate information on excellent local companies.

Information on local companies will be provided by 11 coordinators as needed.

Conducted 85-page mini-seminar for Vietnamese companies

In addition, a mini seminar titled “Tips for Successful Business Meetings with Japanese Companies: Precautions and Practices” was held to help Vietnamese companies understand different cultures when they visit Japan.

(The PPT slides were then translated into Vietnamese for the lecture.)

Cross-cultural understanding and adaptation are major themes for coordinators, Vietnamese companies, and, above all, for Japanese companies that have set up operations in the country.And difficult.

One particular difficulty is that it is difficult to know whether or not the concerns that are being addressed are due to cross-cultural maladjustment (or simply the personality of the individual).

The answer is only understanding and compromise, but it is very difficult to find the right balance.

Vietnamese are not bad at reporting, but dare not?

For example, one of the things that Japanese companies want Vietnamese companies and Vietnamese employees to observe is “Ho-Ren-So（Report, Contact, Discuss)”.

Although it is easy to judge a lack of horenso as cross-cultural maladjustment, the importance that Japanese companies place on Ho-Ren-So（Report, Contact, Discuss) was well understood within most local companies.

The reason why they do not report to each other is not that they do not understand the culture of reporting, but that they understand it, but do not do it because they feel there is no or little benefit to doing so, and that it becomes a much lower priority.

Because even if you report, 

• And things change all the time along the way.
• And there’s a lot you don’t know unless you try.
• If I make a mistake, I don’t report it to them, and they somehow manage to correct the course and make it all add up,
• I can match it.
• It’s faster that way.
• And we don’t want to make a mess of the situation.

It is like that.

If you take a step back and think about it, it is very reasonable to say that as long as the books are in order, nothing matters as long as the results are achieved, and in a sense, it may be very independent, hands-off, and eco-friendly.

Thinking while running and producing results is a way of thinking that can be easily developed on a global scale.

Japanese companies are not looking for home runs.

Nevertheless, this practice is not the norm for Japanese companies, and few, if any, Japanese companies would actively do business with a midstream company that does not have a complete reporting and communication system, especially overseas.

Even if we happen to deliver successfully this time, it does not necessarily mean that we will be able to do so the next time. In other words, if there are no reports during the process and the process is not visible, it cannot be said that reproducibility is ensured, and the uncertainty cannot be removed.

Japanese-affiliated companies want to be sure to get on base every time, rather than hit a home run by accident.

If you can’t imagine that the underlying thought is, “I don’t want a lot of confidence that I don’t understand, I want you to reduce my anxiety,” you can hardly build a good relationship.

While using such parables and flipping through 85 PPT slides like a picture-story show, I conveyed the importance for “both sides” of efforts to come to terms with the cross-cultural gap, with moderate chuckles and nodding of heads from the Vietnamese companies’ side.

In conclusion, I think the following compromise efforts will be necessary on both sides.

[To Vietnamese companies and Vietnamese employees] it is worthwhile to report to each other (first of all).

It is difficult to practice the “hourensou” (reporting and communications) that is said to be so important in business dealings with Japanese companies, even if you know what it is.

You may be wondering when you should report, whether it is appropriate to wait until you have a little more perspective, or whether it is okay to wait until after everything is done. 

The best time to report is when you think you should report it. The time to report is when you think it is a good idea to do so. Do not hesitate to report at that time.

Next is when things change from the plan. Even if it is a small change, you should always report it.

Finally, there is the time when you think this is a bad idea. It is precisely at such times that you should have the courage to report that you thought it was a bad idea, and that is why you are reporting it, because the point at which you realized it was a bad idea is wonderful.

Especially when things change from the plan, 

(1) Facts that have changed, and why they have changed
(2) Future prospects due to the change 

It would also be appreciated if you could also explain

Depending on the content of the report, Japanese superiors and Japanese companies may be upset.

However, if you proceed without reporting it, the upset will likely turn into ‘anxiety’ and sometimes ‘anger’.

Japanese supervisors and Japanese companies understand to some extent that circumstances will change as they expand their business in Vietnam.

However, when they are not consulted or notified about the change, they become angry, disappointed, and give up, which leads them to lose trust in the other party and builds a high wall of anxiety.

Even if it is difficult to proceed as planned, at least reporting the situation is enough to prevent them from becoming angry, disappointed, or giving up.

Also, if you are concerned that the impact of the change will be greater than the Japanese company thinks, please tell them as it is.

Please do not try to recover on your own.
Report bad news and good news alike.

It takes courage, but this will help you get closer to the Japanese company. Even if the Japanese company seems angry when you report it, in your heart of hearts, they are probably thinking, “Thank you for the report. (Even if it doesn’t look like that at all.)

Even if you look grim at the time, you will be rewarded for your reporting (even if you don’t believe in it). Please try to do it even when you are wondering whether there is no need for it or not. 

[To Japanese Companies] Reporting is already being done.

On the other hand, to Japanese companies.

How about lowering your expectations of the number, content, and frequency of reports you receive much lower?

Rather than worrying about things not going as planned, it would save time on the part of the Japanese companies to restart with the parts that have made some progress (usually not as expected).

On the other hand, it is actually quite common for the Vietnamese side to report properly but not realize that they are reporting.

You may feel that this is not reporting but an excuse, that it is a self-serving development, or that it is totally different from the initial explanation, but there is no doubt that you are reporting the situation.

Therefore, it is important to redefine this as a type of reporting, and to receive reports first. Even if you go through the trouble of thorough reporting, if it is not appreciated, the next step is to go down the road to no contact.

Even if the reporting differs from expectations, accept it as the best and highest level of reporting at the time, restart from there, and move the frame forward first to reach the goal together. (If it looks like we can meet it)

If we reach the goal together, we can understand that this is what it was all about, and we can do it, but why didn’t you tell me? I’m sorry I didn’t see it…),

Or, it may be that this is still unacceptable, or not acceptable at all. (How can I make you understand…)

This is a view that can only be seen when you reach a goal together. Rather than making detailed suggestions each time, it may be more efficient to discuss the goal once it is shared and then for the first time discuss it knee-to-knee, and make a careful retrospective evaluation.

On the other hand, if there is an actual loss.

If the project was carried out in a way that was not what we were told, if the change from the plan had a significant negative impact, or if the impact of the change during the process was very unfavorable from an overall perspective (i.e., the balance of accounts did not add up),

we need to explain in detail how the loss could have been avoided, how the Japanese side sees this but the Vietnamese side does not, and ask for cooperation in preventing a recurrence. In this case, it is necessary to explain and share the situation in full words and ask for cooperation in preventing recurrence of such a situation. Another option is to keep a little distance from the situation.

If they are serious, Vietnamese companies and Vietnamese employees who wish to do business with Japanese companies in the long term, they will deeply understand that the weight of the actual loss and the need for improvement are all for the sake of Japanese companies wanting to further develop their business in Vietnam.

Today, the new coordinators in Dong Nai Province are committed to supporting Japanese companies in Vietnam by acting as a bridge between Vietnam and Japan so that they can expand their business operations as smoothly as possible.

If you have any problems regarding the cross-cultural gap, please consult with them and they will help you find a way to solve the problem together with great resonance and empathy.