From cadre to manager
Embracing a market system doesn't come
naturally to most former managers of state-owned
firms. In a transition economy like Vietnam's, "there's a
huge amount of inertia to overcome," says Roger Ford,
senior adviser for academic affairs at the Hanoi School
of Business. "Many of these managers are 45 or 50
years old and suddenly everything they've been taught
doesn't apply any more."
In their former lives, wrapped in the prestigious mantle
of state protection, they never made a single decision
alone. And as government superiors dawdled over
approvals, business opportunities whizzed right by. The
first problem they face now is finding the confidence to
take charge.
"It takes at least two years for them to digest the idea
that they are really free to make their own business
decisions," says Pham Uyen Nguyen, deputy managing
director of BaoViet Securities Company in Ho Chi
Minh City. BaoViet has been busy advising Vietnamese
state firms undergoing a process called "equitization,"
whereby most company shares are transferred to
private hands and the state typically retains a minority
stake of 20%. The process is essentially the same as
privatization, but that remains a dirty word in Vietnam.
Over the past decade, 710 Vietnamese state
companies have passed into private hands. But the
pace is slowing, with just 132 companies taking the
plunge in 2001 compared to 212 last year. At this rate,
it looks unlikely that Vietnam will reach its target of
transforming more than 1,800 out of the nation's 5,571
state-owned companies by 2003, mainly because so
many managers remain resistant to change. They know
their heads will be on the block if profits don't improve.
But there are some pioneers worth watching, as they
grapple with the pressures of adapting to the
marketplace.
Nguyen Thanh Phuong finds the new pace frenetic but
lucrative. As a vice-director of Thien Huong, a Ho Chi
Minh City-based company that produces noodles and
sauces, he's responsible for pumping out six new
products each month--varying the contents and
packaging to suit divergent tastes of customers in the
north, south and central regions.
"The pressure on managers of equitized companies is
30 times as much as in state firms," Phuong says. "We
feel more pressure to create jobs, pay salaries and
provide higher dividends for workers." Consensus-style
decision-making has vanished. "We work very
independently," he explains. "We have to decide by
ourselves right away and take responsibility for those
decisions."
Since the company went private in October 2000,
Thien Huong has hired Japanese consultants, set up two
separate units for marketing and product research and
sent the entire marketing staff for short business
courses. Monthly revenues have reached 27 billion-30
billion dong ($1.78 million-1.98 million), compared with
just 18 billion-20 billion dong under state ownership.
Managers are also adjusting to more freedom in dealing
with recalcitrant employees. Under the state system, it
was particularly difficult to fire anyone--even just a
transfer of a politically well-connected employee could
prompt an unpleasant backlash.
Back to school
Nguyen Duc Thanh learned about customer care at the
Hanoi School of Business and applied those lessons to
the West Lake Recreation Park. He has no regrets
over firing 30 staffers in the past year for speaking
rudely to the park's visitors. "If a state company took
over a park like this, they would never succeed," says
Thanh, a former manager of a state-owned construction
firm. "No one would speak sweetly to the customers
and they would all run away." To drive the lessons
home, Thanh recruited some business-school lecturers,
and set up brainstorming sessions with employees on
how to improve services to families.
Motivation is also on display at Hanoi's Thach Ban
Brick and Tile Share Company, which went private in
November 1998. Nobody takes the local construction
boom for granted any more--sales agents now pitch
products directly to construction-site supervisors and
homebuyers.
And at the Ham Long Joint Stock Company, heads of
manufacturing units who don't meet their targets will
bear the consequences. "We give them three months to
work out a solution. If not, they will be assigned to
other units," says Le Thang Loi, director of the
Hanoi-based company. So far, Loi has been forced to
transfer one unit head.
Before the company went private in 1998, it was
churning out clocks and watches. But Loi says they
couldn't compete with cheaper products smuggled in
from China. So it hired ambitious managers from
outside, retrained workers and began making
ping-pong tables--further proof that radical change can
triumph over conservative instincts.
By Margot Cohen - The Far Eastern Economic Review - December 20, 2001.
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